UK - Pension funds have put the management structure at oil giant Shell under scrutiny after an over-estimation of its oil and natural gas reserves.
The move follows the group’s announcement that 3.9bn barrels of oil and gas – 20% of its reserves – would be reclassified as “non-proved”.
The announcement led to a drop in Shell’s share prices and sparked industry questions about the company’s management structure and the future of chairman and executive director Sir Philip Watts.
Sir Philip’s twin roles contravene corporate governance best practice set out in the Higgs Review, which states that chairmen should be non-executive.
A spokesman for the National Association of Pension Funds said the situation was being closely monitored ahead of Shell’s AGM in April and release of full year results on February 5.
Rating agency Standard & Poor’s is considering cutting Shell’s triple-A rating as a result of the over-estimation.
The Pensions and Lifetime Savings Association (PLSA) has announced it will shrink its board by more than one-third as part of a governance overhaul to make it "agile and more appropriate".
Smaller FTSE 350 defined benefit (DB) schemes were nearly 15 percentage points less well-funded than larger schemes in 2017, according to a Goldman Sachs Asset Management (GSAM) analysis.
The advent of collective pension systems could help the UK avoid demographic challenges which will make it "impossible" for society to help savers in retirement, experts say.