Royal Dutch/Shell Group on Wednesday named Jeroen van der Veer, 57, a career-long employee, as president and chairman of the Committee of Managing Directors. He takes over for Sir Philip Watts, who stepped down in an apparent mutual agreement with the company. Also resigning was Walter van de Vijver, 48, CEO of Shell’s Exploration and Production Business, who was considered at one time to be Watts’ eventual successor.

Both Watts and van de Vijver had been criticized by investors and financial analysts following the reclassification of 20% of Shell’s proved reserves in January (see Daily GPI, Jan. 12). The reclassification launched a formal inquiry not yet completed by the Securities and Exchange Commission (SEC) last month (see Daily GPI, Feb. 20).

Van der Veer, a Dutch national who joined Shell at age 23 with a mechanical engineering degree, has been a managing director of the company since 1997 and president since 2000. He joined the group in 1971 in refinery process design and held several positions in refining and marketing in the Netherlands, Curacao and the United Kingdom. He also was coordinator of Shell’s Sub-Saharan Africa business (1990-92) and a managing director of Shell Nederland (1992-95).

From 1995 to 1997, van der Veer was president and CEO of Shell Chemical Co. in the United States. He also is a member of the supervisory board of De Nederlandsche Bank and an advisory director to Unilever. He has a contract until July 2008, and has given up an early retirement option.

Malcolm Brinded also has been appointed a director and managing director of the company and will serve as vice chairman of the Committee of Managing Directors. Brinded will step down from the Board of Management of Royal Dutch Petroleum Co., and he offered himself for election by shareholders of the Shell Transport and Trading Co. plc at the forthcoming annual meeting.

Brinded, 50, has been a managing director since July 2002 after first joining the company in 1974. Brinded held various positions in the Netherlands, Brunei, Oman and the United Kingdom, and was general manager of Shell UK Exploration and Production in Aberdeen, Scotland between 1998-2001. He was Shell’s Country Chairman in the United Kingdom 1999-2002, and served as director of Planning, Environment and External Affairs at Shell International Ltd. 2001-02.

Shell also announced that Lord Oxburgh has been appointed interim non-executive chairman of the Shell Transport and Trading Co. van de Vijver’s duties as CEO will be assumed by Brinded, in addition to Brinded’s current responsibilities for the Gas and Power business. Rob Routs, currently a member of the board of management of Royal Dutch Petroleum, will assume Van der Veer’s responsibility for the Chemicals business in addition to his current responsibilities for the Oil Products business. Judith Boynton will continue as a managing director and as CFO.

Peter Nicol, an ABN Amro analyst based in London, said Shell’s upstream team had been made a “scapegoat” for the reserves reclassification. He added that “van der Veer faces a lot of competing agendas.” He said Shell had “been in decline for 10 or 15 years,” and van der Veer is a “safe pair of hands” who could “heal the company and move it forward.”

Also in a research note, Merrill Lynch analyst Mark Ionnati said, “Senior management appears to have succumbed to significant pressure from shareholders.” The news is a “positive for the shares on a near-term trading basis, in our view. However, the merits of a more fundamentally based rally on an improving performance outlook versus industry peers remains to be seen.”

Ionnati added, “Importantly, we understand that today’s events were not inspired by any new news on the official investigation by the SEC on Shell’s overbooking of reserves.” Shell is conducting an audit of its reserves reclassification and is expected to give the SEC the information once the audit is completed.

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