Oil giant chairman quits

Royal Dutch/Shell has announced the surprise departure of its chairman Philip Watts - the target of an investor backlash over the oil giant's bungled downgrade of its oil and gas reserves.

    Royal Dutch/Shell is Europe's second biggest oil company

    Watts, 58, stepped down on Wednesday as head of Europe's second-largest oil

    company with immediate effect and "by mutual consent", Shell said

    .

    He will be replaced by vice chairman Jeroen van der Veer, 57,

    who is also president of Royal Dutch Petroleum, the

    Netherlands-based arm of the group.

    Another senior executive, Walter van de Vijver, the head of

    Shell's exploration and production division, will also leave his

    post as part of a series of management changes.

    The price of Shell shares surged on news of the board-room

    reshuffle, trading 2.1% higher at 383.75 pence in late deals.

    Royal Dutch shares rose 1.6% to 41.42 euros in Amsterdam.

     

    Disgruntled investors

    "Royal Dutch/Shell has always been a company that doesn't like

    to react to shareholder pressure and reacts slowly," said

    Commerzbank analyst Clay Smith.

    "For them to react this severely and this rapidly has got to be

    seen as a positive."

    But Smith was doubtful whether the reshuffle would wipe the

    slate clean in the eyes of disgruntled investors.

    "Management changes don't solve operational problems," he said.

    The oil giant angered investors with its announcement on 9 Jan

    uary

    that it had re-categorised 3.9 billion barrels of oil and gas -

    one-fifth of its reserves - from proved to unproved.

    "Royal Dutch/Shell has always been a company that doesn't like

    to react to shareholder pressure and reacts slowly.

    For them to react this severely and this rapidly has got to be

    seen as a positive"

    Clay Smith,
    Commerzbank

    The announcement sent Shell shares sliding by more than 10% and

     prompted calls from some investors for the chairman's

    resignation.

    Untenable position

    Watts was singled out for particular criticism because he failed

    to make himself available to investors to explain how the error over

    the reserves occurred.

    He was also head of the exploration and production division when

    the disputed reserves were booked.

    Watt's term was due to end in June 2005 when he reached the

    Shell's mandatory retirement age of 60.

    But his position apparently became untenable as the backlash

    from the reserves debacle spread.

    Last month the US Securities and Exchange Commission (SEC)

    launched a formal inquiry into the downgrade.

    Shell is also facing a class action lawsuit in the United States

    from shareholders who allege the oil group deliberately violated

    accounting rules by misreporting its reserves in filings to the

    SEC.

    Powerful shareholders

    Watts' departure is yet another coup for powerful institutional

    shareholders looking for a greater influence over the running over

    Britain's biggest companies.

    It comes less than a month after supermarket chain Sainsbury

    was forced into a humiliating climb-down over the appointment of Ian

    Prosser, ex-head of the Bass group, as its future chairman, after

    strong opposition from big shareholders.

    SOURCE: AFP


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