2004/10/28 Shell
Royal Dutch/Shell proposes one company, one board and one Chief
Executive
Joint announcement by N.V. Koninklijke Nederlandsche Petroleum
Maatschappij (“RD”) and The “Shell” Transport And Trading Company, Public
Limited Company (“ST&T”)
The Boards of RD and ST&T have unanimously agreed to propose
to their shareholders 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 Chief Executive. |
| ・ | Accountability: clarity in governance, reporting relationships and responsibilities. |
Key Proposals
| The proposals include the following features: | |
| ・ | RD and ST&T will unify under one new parent company, Royal Dutch Shell plc (“Royal Dutch Shell”) (the “Transaction”). The new single parent company will be incorporated in the UK and headquartered and tax resident in The Netherlands. |
| ・ | Reflecting the current ‘60:40’ ownership of the Royal Dutch / Shell Group of Companies (the “Group”) by RD and ST&T, RD shareholders will be offered 60 per cent of the issued share capital of Royal Dutch Shell and ST&T shareholders will be offered 40 per cent. |
| ・ | Royal Dutch Shell will have a single tier Board of Directors chaired by a non-executive Chairman. |
| ・ | With immediate effect, Mr Jeroen van der Veer will become the first Chief Executive of the Group. He will have full executive authority and be empowered to drive strategy implementation, operational delivery and cultural change. |
| ・ | Mr Aad Jacobs will be the non-executive Chairman until his previously planned retirement at the Annual General Meeting (“AGM”) 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 ten non-executive and five executive Directors. The ten non-executives will initially be drawn from the seven members of the RD Supervisory Board and the nine non-executive members of the ST&T Board. Of these ten non-executives, five are expected to be replaced by 2008, namely the Chairman in 2006 and two more in each of 2007 and 2008. |
| ・ | Reporting to the Chief Executive from today will be: Mr Peter Voser, Chief Financial Officer; Mr Malcolm Brinded, Executive Director of Exploration and Production; Ms Linda Cook, Executive Director of Gas and Power; and Mr 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 (“ADRs”), 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 capitalisation. |
| ・ | 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 the first quarter of 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. |
| Implementation The proposals are expected to be implemented through (i) a public exchange offer by Royal Dutch Shell for the RD ordinary shares (the “Tender Offer”) and (ii) the acquisition of ST&T by Royal Dutch Shell pursuant to a Scheme of Arrangement of ST&T under section 425 of the UK Companies Act 1985 (the “Scheme”). Implementation of the Transaction will be the subject of appropriate consultation with relevant employee representative bodies as required. |
|
| The terms of the Transaction will provide that RD shareholders will be offered 60 per cent of the issued ordinary shares in Royal Dutch Shell and ST&T shareholders will be offered 40 per cent of the issued ordinary shares in Royal Dutch Shell. There are currently 2,074,400,000 RD ordinary shares and 9,624,900,000 ST&T ordinary shares in issue and therefore the exchange terms are expected to be that: | |
| ・ | RD ordinary shareholders will be offered two ’A’ shares in Royal Dutch Shell for every one RD share currently owned; and |
| ・ | ST&T ordinary shareholders will be offered approximately 0.2874 ‘B’ shares in Royal Dutch Shell for every one ST&T share currently owned. |
US and other shareholders of RD
and ST&T will have the option of receiving ADRs (which will
represent two Royal Dutch Shell shares).
The conditions to both the Tender Offer and the Scheme must be
satisfied for the proposals to be implemented. Implementation of
the proposed Transaction will be subject to votes of the
shareholders of RD and ST&T that are expected to take place
on 22 April 2005, the same day as their respective AGMs. It is
expected that the Transaction will complete in May 2005 and that
Royal Dutch Shell will report its first set of full financial
results for the six months to 30 June 2005.
Aad Jacobs, Chairman of RD, said today: “Today’s announcement is an historic step forward
for the Royal Dutch / Shell Group and has the unanimous support
of the Boards. The proposals build on the best characteristics of
the Group and promise significant benefits for our global
business.”
Lord Oxburgh, Chairman of ST&T, said today: “The Boards appreciate the support of
shareholders and the feedback we have received throughout what
has been an extensive process. The proposals are far reaching and
we believe that they offer great benefits to shareholders and
everyone with an interest in the Group.”
Jeroen van der Veer, Chief Executive, said today: “I am honoured 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.”
This summary should be read in conjunction with the full text of
this announcement.