Succession fears at soaring Shell

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The Independent Online

Investors in Shell, that this week revealed record third- quarter earnings of £2.24bn, are becoming concerned that the oil giant could be caught up in a succession battle which could undo many of the reforms that have re-shaped the company in the last 18 months.

Investors in Shell, that this week revealed record third- quarter earnings of £2.24bn, are becoming concerned that the oil giant could be caught up in a succession battle which could undo many of the reforms that have re-shaped the company in the last 18 months.

Sir Mark Moody-Stuart, who has revolutionised the group, is retiring next June before his three-year reform programme is completed.

His departure, though in line with Shell's policy of senior executives stepping down at 60, has been seen by some analysts and shareholders as a signal that not enough has changed at the famously bureaucratic oil giant.

There is also a concern about who might take over, with three clear candidates vying for the top spot.

Four months ago the man expected to succeed Sir Mark, vice chairman Marteen van den Bergh, resigned. The most senior and respected candidate now is the head of exploration and production, Phil Watts. He is seen as an ally of Sir Mark.

Another Brit is seen as a good candidate - Paul Skinner, the head of oil products who has been restructuring the US businesses.

However, it is a Shell tradition that a Dutch chairman follows a British head. This would place Jeroen van der Veer, who only became vice chairman earlier this year, in pole position.

Investors are concerned that this appointment could be a retrograde step and would indicate that Shell thinks it has done enough to deal with its extensive bureaucracy and arcane business practices.

"With this [Van der Veer's] appointment there would need to be a period of introduction to investors as his profile among the investment community is limited, and there is little personal association with the current restructuring programme," said Mark Iannotti, oils analyst at Schroder Salomon Smith Barney.

The succession issue has reared its head at a time when the oil group faces further uncertainty when finance director Stephen Hodge retires in March. There are no obvious internal candidates, so Shell may have to take the radical step of bringing someone in from outside the group, and maybe even from outside the oil industry.

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