The boards of N.V. Koninklijke Nederlandsche Petroleum Maatschappij (RD) and Shell Transport and trading Co. (ST&T) proposed the unification of the Royal Dutch/Shell Group of Companies under a single parent company, Royal Dutch Shell plc. Real reforms in management and governance structure are also planned.
The boards believe that implementation of these proposals will strengthen the group and deliver significant benefits:
* Clarity and simplicity: one listed company, one board, one chairman, and one chief executive.
* Efficiency: streamlined decision-making with clear lines of authority and an empowered CEO.
* Accountability: clarity in governance, reporting relationships, and responsibilities.
"I am honored to be the first chief executive of Royal Dutch Shell. There is much to be done to deliver our strategy and priorities but I believe that these proposals will help propel this group forward and they provide the necessary platform for me and my executive team to deliver improved performance and results across all our businesses," Jeroen van der Veer, chief executive, says.
The proposals include:
* RD and ST&T will unify under one new parent company, Royal Dutch Shell plc. The new single parent company will be incorporated in the UK and headquartered and tax resident in The Netherlands
* RD shareholders will be offered 60% of the issued share capital of Royal Dutch Shell and ST&T shareholders will be offered 40%
* Royal Dutch Shell will have a single tier board of directors chaired by a non-executive chairman
* With immediate effect, Jeroen van der Veer will become the first CEO of the group. He will have full executive authority and be empowered to drive strategy implementation, operational delivery and cultural change.
* Aad Jacobs will be the non-executive chairman until his previously planned retirement at the Annual General Meeting in 2006 when it is envisaged that he will be succeeded by an external appointee. The search for his successor will start immediately. Lord Kerr will be the deputy chairman of the board and senior independent non-executive director
* Royal Dutch Shell's board will have a majority of independent non-executive directors and will initially consist of 10 non-executive and five executive directors. The 10 non-executives will be drawn from the seven members of the RD supervisory board and the nine non-executive members of the ST&T board. Of these 10 non-executives, five will be replaced by 2008, including the chairman in 2006 and two more in each of 2007 and 2008
* Reporting to the chief executive from today will be Peter Voser, chief financial officer; Malcolm Brinded, executive director of exploration and production; Linda Cook, executive director of gas and power; and Rob Routs, executive director of oil products and chemicals. The committee of managing directors will be abolished
* The current split central offices will be consolidated into a single headquarters in The Netherlands, where the board and substantially all of the senior management will be based. A substantial presence will be maintained in the UK, which will remain the base of the global downstream (oil products and chemicals) and trading businesses
Royal Dutch Shell will apply for its shares to be listed and admitted to trading in London, Amsterdam, and in the form of American Depositary Receipts, New York
* Following consultation with FTSE International, the boards are confident that Royal Dutch Shell will be included in the FTSE All-Share and FTSE 100 indices with a weighting reflecting its full market capitalization
To preserve the current tax treatment of dividends for all shareholders, Royal Dutch Shell will have 'A' and 'B' shares. It is envisaged that RD shareholders will receive 'A' shares and Dutch-sourced dividends while ST&T shareholders will receive 'B' shares and UK-sourced dividends. These 'A' and 'B' shares will otherwise be identical and will vote together as a single class on all matters and have dividends of the same amount declared
* Dividends will be paid quarterly (as opposed to semi-annually currently) starting with the dividend for 1Q 2005. Dividends will be declared in Euros but the holders of 'B' shares will receive dividend payments in Pounds Sterling and holders of ADRs in US dollars. Royal Dutch Shell will continue to seek to increase dividends at least in line with inflation over time.
10/29/04
