Shell shuffles towards the States
This is getting serious. The list of companies deciding that corporate life, or at least the value the locals put on it, is better in New York than in London is growing steadily. Some of the bolters can claim to have no particular history as British companies, and can reasonably point to how much business they do across the Atlantic.
Their executives are unlikely to highlight the opportunity to get seriously rich, rather than just impressively wealthy, because shareholders over there are less fussed about executive pay than we are in Britain. Still, it’s a factor, especially given the relatively short life of today’s CEO.
London can survive without CRH (an Irish company), Smurfit Kappa (now more American than British) or Flutter Entertainment (the US gambling market is just opening up) but the disclosure this week that the biggest company on the London Stock Exchange was contemplating a flit is much more serious.
Like us long-suffering shareholders, Shell’s new CEO, Wael Sawan, thinks the shares are far too cheap. Partly this is the fault of the previous board for playing ducks and drakes with the dividend after the great panic of 2021, but it would be naive to ignore the constant light drizzle of activist groups who would prefer Shell not to be an oil company.
Sawan was joined this week by his predecessor Ben van Buerden, who described the shares as “massively undervalued”. Both are musing about going to New York, where Exxon shares command a much higher rating. In some ways, Exxon is a better business and deserves its premium, but its board has also resisted drinking the green kool-aid.
Both Exxon and Shell are oil companies. It’s what they know, and what they do. Like BP, Shell has been distracted into technologies where their expertise is much less applicable than they thought, and where returns are much worse than in oil and gas. Unlike their British twin BP, Sawan and his board have realised their mistake, but they are now paying the price in harassment from the eco-warriors in their business and the courts.
Losing the share quotation of its biggest company would be a bad blow. If it were to encourage the likes of Rio Tinto or Glencore to look at a move, then the London market starts to look like a backwater. Underlying all this is the perception that this dying Conservative administration has no more interest in supporting the City than it did under Boris Johnson. If you treat an important industry with contempt, then sooner or later those in it will return the compliment.
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