HOUSTON - Shell Oil Co. probably will shift about $1 billion of internally managed pension assets to outside money managers.
The process could begin by the end of this year.
Although Shell officials would confirm only that the company is considering the move, sources outside the company consider it a done deal.
Shell officials say no staff cuts are anticipated. But the outside sources contend Shell also is looking at downsizing its pension staff.
Shell's situation is similar to that of IBM Corp., Stamford, Conn. IBM ceased active internal management of pension assets, and is shifting almost $8 billion to outside money managers. IBM also is cutting its pension staff about 50%. Shell officials contend their proposal doesn't involve "slash-and-burn" staff reductions.
David H. Zellner, manager equities, has announced he will leave Shell in the next few weeks, sources say. Mr. Zellner didn't respond to telephone calls seeking comment.
No other staff defections are expected.
All of those interviewed spoke on condition of anonymity.
P.G. Turberville, Shell's vice president-finance for about a year, is said to be the force behind the shift to external money management. Mr. Turberville didn't return telephone calls seeking comment.
If the internally managed assets are shifted to outside managers most - if not all - would be placed with some of Shell's 42 existing money managers, Shell officials say. No new asset classes would be added.
Shell has defined benefit assets of approximately $4.39 billion, of which about $1 billion is managed internally in fixed-income and equity portfolios.
"The goal at Shell is to outsource everything and begin to shift their internally managed assets to the outside. They are being charged to use as much outside management as possible," said one source close to Shell. "They are going to have less internal management of pension assets."
A Shell executive said the company is re-evaluating whether to continue managing assets internally. He said a final decision is expected by year end. Implementation would begin immediately.
"We are in the midst of thinking this through, and the decisions have not been completely made," said the Shell official.
Shell also has been pondering whether to outsource its defined contribution plan and shift to an unbundled approach to investments, administration and record keeping.
One Shell source said an internal study is being conducted and that officials expect to submit a request for information from vendors to gather information on whether to consider bundled, unbundled or alliances for its 401(k) and profit-sharing plans.
Shell has about $5.5 billion in defined contribution assets.
