At its annual general meeting last week, Royal Dutch/Shell Group shareholders easily approved all of the resolutions on the group’s ballot, but voting indicated that many would like some management practices to change.

The Royal Dutch group held its meeting in The Hague, where it is headquartered, while a similar meeting was being held in London for Shell Transport & Trading Co. Royal Dutch holds 60% of the operating group, while London-based Shell holds 40%.

Even though all of the resolutions put forward by the company passed, many of the shareholders voiced their displeasure in the reserves accounting scandal that has required the company to recategorize 22% of its oil and natural gas reserves since January.

However, with no resolutions specifically about the reserves problems, shareholders expressed their opinions in other ways. Investors representing nearly 40% of the Dutch stock voted against a resolution that stipulated the managing directors and the supervisory board should “be discharged of responsibility in respect of their management for the year 2003.” And 10% of the London-based company’s shareholders disapproved of the group’s executive remuneration package.

The concerns were noted by the executive team. “These recent months have felt simply dreadful,” the group’s top executive, Jeroen van der Veer, said at The Hague meeting. “I agree that such a crisis should never have happened. But it has, and I sincerely regret this.”

When the scandal broke, three top executives were fired and van der Veer was selected to take over. Among other things, Shell dropped a bonus plan that compensated executives for growing the company’s proved and probable reserves. However, the plan to include hydrocarbon reserves growth into bonus packages for executives may be reinstituted in the future.

Malcolm Brinded, managing director of London-based Shell Transport & Trading Co., told shareholders that even though the company has “taken reserves off the bonus scorecard for this year…we will look again, because reserves replacement is an essential component of our targets.” Brinded said he did not think the bonus system for reserves building “has ever been seen as a major inducement” because only 5-7% of the bonus packages were based on that criteria.

Management also announced that the formal investigation by the U.S. Securities and Exchange Commission (SEC) into the reserves reclassification continues (see NGI, Feb. 23). Nearly 30 Shell employees apparently have been interviewed by the SEC. The criminal probe into the reserves accounting also is ongoing by the Department of Justice (see NGI, March 29).

Following the meeting, analysts with JP Morgan downgraded the company to “underweight” from “neutral.”

The oil major also took a hit from analysts with Credit Suisse First Boston (CSFB), who advised clients to switch from Shell to BP plc after BP on Tuesday announced it was revising its reserves upward (see related story).

“This confirms that Shell’s reserve downgrade and weak reserve position are Shell specific and not generic,” CSFB said in a note.

©Copyright 2004 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.