By John Donovan of royaldutchshellplc.com

Several global news organisations recently published a syndicated article on the introduction of so-called “Cold Wind Rules” by the oil giant Shell. A related leaked email set out measures being taken by Shell management in reaction to the economic downturn. It warned that “The world has changed” and it is now “business as unusual”. It contained the instruction to “ruthlessly review 3rd party costs”.

A further bout of belt-tightening has been announced in another leaked Shell internal email, this time citing “unprecedented times for the oil and gas industry and therefore for Shell.”

Times must be tough. The email sets out more cost saving measures, including cutting off the delivery of coffee, bottled water, soft drinks, biscuits and fruit to Shell staff. It also instructs them to share taxis. It concludes with the heart-wrenching appeal “We urge you all to think about what more you can do to help support Shell in the difficult times ahead”.

Contrast these petty measures with the lavish rewards paid to Jeroen van der Veer and “Golden Handcuff” payments to other Shell senior executives, all on top of their annual “compensation” packages.

Even Sir Phillip Watts, the dishonest Shell chairman responsible for the Shell reserves fraud, received a lump sum severance payment of £1,057,971 (almost $1.5 million) and an (index linked) pension of £584,070 per annum (over $800,000 per year).

In the circumstances, such ruthless treatment of Shell employees (and Shell UK pensioners) is deplorable.

Shell Dutch employees have recently discovered that their pension fund is in meltdown and caught up in the $50 billion Madoff fraud. Perhaps Shell is trying to save cash to shore up the pension fund?

So what is the likelihood of Shell executives making a token gesture by giving up some of their remuneration and perks to demonstrate empathy with Shell employees? We all know the answer.

Shell was given advanced sight of this article and therefore had the opportunity to refute the authenticity of the leaked email and the information about job cuts. It has not done so.

Recent related postings on the Live Chat facility of my website royaldutchshellplc.com:

GUEST:

Mr Donovan, I have sent you the latest cold wind rules email setting out further belt tightening measures. Shell top is now moving on to the more petty stuff. I expect they will soon be rationing tea bags and toilet tissue. Will the fat cats Brinded, Cook and Voser set an example by giving up their golden handcuffs? Fat Chance. Same applies to the gold plated pension of van der veer. One set of cold wind rules for our greedy ruthless bosses and another for the people like me working at the coalface.

GUEST 101:

The downturn is here… YES! From the same company that brought you record profits and shareholder returns in 2007 AND 2008.

It has gone from the petty to the ridiculous… How can a company that for the last two years has boasted the largest profits in British history now go on to be cutting sandwiches and fruit… and encouraging their employee’s to get their own lunch.

How is it possible that the company is run on such a day to day basis that you cannot plan for a 3 month downturn… Exxon foresaw this in April last year… why could we not? Now there are job-cuts and cost cutting exercises all over the place!!!!

EP New Business 30% reduction, Gas and Power 20% reduction, Shell Global Solutions 10% reduction in staff…. and Shell is doing it in a very clever way, making everybody re-apply for their own jobs…and if you don’t get a job internally – its your fault!

So in the next 6 months you will see massive numbers of very quiet redundancies going on in Shell… when only 6 months ago we were paying many of these same people retention packages to keep them IN the company… it makes no sense at all to be managing your business in this much of a short term way!

THE RELEVANT LEAKED SHELL INTERNAL EMAIL DATED 27 FEBRUARY 2009

From: InformationDesk-SIEP SI-REE-FM 
Sent: 27 February 2009 11:16
Subject: Mail to All – Delivering services in a downturn / Dienstverlening in economisch slechte tijden

Delivering services in a downturn

As you know, these are clearly unprecedented times for the global economy, and unprecedented times for the oil and gas industry and therefore for Shell. The businesses and functions are all being challenged to deliver cost reduction commitments.

Shell Real Estate is committed to make savings at our main locations (The Hague as Corporate HQ, Rijswijk as Upstream HQ and Shell Centre as Downstream HQ). We should focus on the basics: running our operations as safely and efficiently as possible – and cut out things that are not essential.

Supported by the Senior Business Leaders at these three main locations, SRE has decided to implement a series of cost- saving measures of which the following are relevant for Rijswijk:

· Catering services delivered to departments (additional coffee, bottled water, soft drinks, biscuits and fruit) will no longer be provided. The relevant order forms will be removed from Service Central and current orders will be deleted. We will assure that a sufficient supply of these items is available via our central catering outlets.

· Catering services to meetings will no longer be provided except for a reduced lunch service, upon approval by senior management, for meetings with customers/guests or for meetings that take longer than 4 hours. Even for these meetings you are advised to schedule a break for a normal lunch. More details on the approval process will follow shortly. Over a period of two weeks, current orders will be phased out or re-confirmed upon senior management approval. We will assure that a sufficient supply of normal lunches is assured via our central catering outlets.

· Taxi services will be based on sharing taxis as much as possible. The taxi company Connexxion will manage this for us by proposing shared trips where possible.

· The choice of office supplies will be reduced to the essentials. Together with the supplier Corporate Express we will agree the list of items you can order via their web site.

· Departments will be informed of their spending for these and other on-demand services (reprographics, courier services) and will be provided with advice on how to reduce these costs.

· Further site specific saving plans will follow.

SRE will start implementing these measures in EPiCentre Rijswijk as of March 1, 2009.

We urge you all to think about what more you can do to help support Shell in the difficult times ahead. Please review your use of travel, couriers and events in particular.

Shell Real Estate

Toon Gerritsen

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