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Last Updated: Monday, 28 June, 2004, 16:47 GMT 17:47 UK
Troubled Shell faces shareholders
Shell logo
Shell is struggling to regain shareholder confidence
Oil giant Shell has narrowly escaped being shamed by its shareholders at the first public meeting since it slashed its reserves in January.

Monday's annual meeting had been delayed two months by the crisis, which cost three top executives their jobs.

A resolution which some investors saw as an attempt to let management off the hook was won only on a 60-40 vote.

Shareholders still await Shell's plans for reforming its complex structure, widely seen as a cause of the scandal.

In all, Shell has lowered its claimed reserves four times since the start of 2004.

Close call

The meeting took place simultaneously in London and the Hague, reflecting the Anglo-Dutch company's dual board structure, something its critics want simplified.

You are asking for more patience than the market has
Shell institutional investor

Its full name - Royal Dutch/Shell - reflects the fact that it is the amalgamation of one arm in the Netherlands, which holds 60% of the operating company, and another in the UK.

The 170-year-old company has two separate boards, part of a web of governance that critics say hampers management control and was a major reason why problems with the reserves took months to emerge.

Those critics focused their ire on an otherwise routine resolution at the Dutch meeting, which agrees that managing directors "be discharged of responsibility in respect of their management for the year 2003".

But a body of institutional investors felt the resolution could effectively clear managers of responsibility for this year's multiple downgrades.

Some argued that backing the wording could harm the chances of successful legal action.

'Economical with the information'

Meanwhile, the London meeting proved just as stormy.

Shell's chairman, Lord Oxburgh, suggested that the delay in publicising the problems had been down to senior directors being "economical with the information that they passed to the board".

That was not good enough for some shareholders, already dissatisfied with the length of time the company's own review of its systems is taking.

Shell share price graph

"If shareholders can't have confidence that directors or the chairman are telling the truth," said private shareholder John Farmer, "does that not increase the urgency of accelerating the corporate governance review?"


With the review under way and not due to report till November, Shell did not present any plans to the joint meetings about how it might reform.

Earlier in June Shell said it would consider "all possible methods" to improve its hierarchies, including a full merger.

"People everywhere ask what is going on at Shell and I agree such a crisis should never have happened," Jeroen van der Veer, who took the firm's top job in early March, told shareholders.

"But it has, and I sincerely regret this."

In the event, the apology was not enough to mollify some investors, coming immediately after the firm last week agreed a 1m ($1.83m) payoff to former chairman Sir Philip Watts, the highest-ranking casualty of the downgrades.

"We regret that you are not going to present today a view on the changes to the corporate structure," said a representative of the Dutch pension fund ABP to directors at the AGM in the Hague.

"You are asking for more patience than the market has."

The BBC's Shola Olowu
"Shell has not had an easy time of things, this year"

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