Shell's Watts Tries to Reassure Employees; Group Calls for Resignation
Royal Dutch/Shell Group Chairman Philip Watts apparently sent a letter to employees last week to reassure them that no evidence of wrongdoing was involved in the company's recent oil and gas reserves revision. However, despite the reassurances, a group of shareholders is calling for his resignation.
London-based Shell announced earlier this month that it had overestimated its proved oil and gas reserves worldwide by about 20%, or 3.9 billion boe (see Daily GPI, Jan. 12).
In the letter to employees, which was posted on the company's web site on Jan. 16, Watts said, "It is important to bear in mind that this recategorization was the result of our own internal processes. Based on those reviews, I believe that individuals concerned worked in good faith to the interpretations in use when the bookings were made, following proper processes, and that there is no evidence of any misconduct."
The letter continued, "Despite our desire and best efforts to be as open and transparent as possible, there are constraints on the content and timing of our disclosures. Before the announcement, we initiated contact with the U.S. Securities and Exchange Commission on the recategorization, which is ongoing as you would expect." The letter asked for employees to remain "patient and understanding as we seek to balance the interests of our many stakeholders against the legal and regulatory requirements to which we must adhere."
According to an article this week in the Guardian Unlimited, a London-based newspaper, several Shell investors are "demanding a showdown meeting" with Watts to ask for his resignation. Watts is scheduled to retire in mid-2005. The group apparently is "actively engaged" with the Shell board and said it wants a meeting before the company's fourth quarter results are unveiled on Feb. 5.
The Guardian quoted investors as saying that the "Watts issue" had to be dealt with before other concerns about the dual structure of the company and its governance are addressed. One shareholder was quoted as saying, 'We need change, and it has to start at the top.'
Another shareholder apparently told the Guardian, "At the moment it looks as if executives have closed ranks. We are actively engaged, and we are being robust. They have got to have very good reasons for keeping Watts if we are to accept them."
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