Oil Giant Shell Kicks Off Hunt For New Chair
Royal Dutch Shell, the biggest company on London's stock market, has kicked off the hunt for a new chairman.
Sky News has learnt that the oil giant has asked Egon Zehnder International, the executive search firm, to identify a successor to Jorma Ollila, who is expected to step down next year.
Mr Ollila will have served as Shell's chairman for nine years by next year's annual meeting, marking a natural departure point for the Finnish former Nokia boss.
It was unclear this weekend whether a successor could be drawn from Shell's existing ranks of non-executive directors, who include Guy Elliott, the former finance director of Rio Tinto; Sir Nigel Sheinwald, a former British ambassador to the US; and Linda Stuntz, a top American lawyer.
Some leading investors in Shell are likely to be keen for the company to appoint an outsider as its new chairman as the oil group continues to refine its strategy under its recently-appointed chief executive.
Ben van Beurden took over at the helm of Shell at the beginning of the year, having previously run its downstream operations.
Mr van Beurden was a surprise appointment to replace Peter Voser, another veteran Shell executive who was well-regarded in the City but who quit to spend more time with his family.
The process of finding Mr Ollila's successor is not thought to be especially well-advanced although an announcement about an appointment is likely to be made this year.
The leadership transition will represent another important moment for Shell, with Mr Ollila having taken over as chairman in 2006 in the wake of a scandal which involved the company dramatically overstating its reserves.
With a market capitalisation of more than £153bn, Shell's value outstrips that of every other British company, beating HSBC into second place. It is more than 50% larger than BP, its rival energy group.
Shell attracted some disquiet over its executive pay policies at its annual meeting last month, although it averted the scale of revolt witnessed at a large number of public companies in recent weeks.
The oil giant has also faced searching questions about its strategy since Mr van Beurden took over, after being forced into a profit warning in January which it blamed on weaker refining margins and higher exploration costs.
Like BP, it is engaged in a process of offloading non-core assets, which is expected to generate tens of billions of pounds in proceeds in the coming years.
A number of US shale assets are among those that Shell is likely to divest.
Shares in Shell have risen roughly 12% during the last year, a performance which has trailed that of the FTSE-100.
In his AGM speech, Mr Ollila acknowledged concerns about the company's progress.
"Our cashflow growth has been competitive in the last few years, and our cash flow, $40bn in 2013, was strong in our peer group.
"However, that's not the whole picture, since we have also had weak financial performance from some of our more mature businesses, from Downstream and North America upstream.
"The remuneration policies in the company reflect this performance, with total compensation for the executives reduced by some 50% from 2012 levels, including the use of downwards discretion on bonuses by the remuneration committee."
A Shell spokesman declined to comment on the search for Mr Ollila's successor.