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Treasury

Energy giant shells out less for dividend distribution

Shell’s treasury department has provided the impetus for a dividend payment execution modernization programme that is saving the company millions of dollars every year through reduced FX exposure and lower bank fees.

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Falling commodity prices might have put a dent in its quarterly payments to shareholders, but Shell still distributes around $1.9 billion to approximately 600,000 recipients every three months.

Improving dividend distribution is not an obvious focus area for corporate treasurers, even in an organization as large as Shell, which has hundreds of people across various departments reporting into its group treasurer. But even a cursory knowledge of the process would reveal that it can create sizeable credit and FX exposures and significant cash management issues.

Realizing this, at the end of 2018 Shell’s company secretariat – which oversees these processes and runs the company’s registrar – teamed up with their treasury colleagues to explore the potential for improvement.

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Paul Vos, Shell.
Photo: Hans Stakelbeek

They engaged with all external parties in the dividend distribution ecosystem to establish how things were being done and what improvements could be made, explains Paul Vos, senior manager treasury and corporate finance. “We realized that our processes were lacking so we spoke to a number of our peers to establish what they were doing better,” he recalls.

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