A Tullow Oil shareholder said it will oppose the appointment of the company's founder and current chief executive, Aidan Heavey, as chairman at its annual general meeting (AGM) tomorrow.
"This is a clear violation of an important corporate governance principle, designed to protect shareholders and ensure effective independent oversight of the company’s management," said Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management (RLAM), which holds 8.66m shares in Tullow Oil, or 0.95 per cent of the company worth £18.3m.
When Tullow announced the board changes in January, it said the decision reflected the board's belief that a phased transition in the leadership of the group is necessary because of the unique nature of the firm's business and relationships across Africa.
Tullow reiterated that today, saying:
“As per our January announcement, Tullow’s board believes that... a phased transition in the leadership of the group is appropriate and that Aidan Heavey’s tenure as chairman, following 31 years as Tullow’s founder and chief executive, will not exceed two years.”
RLAM also said it does not support the remuneration committee's decision to continue to pay Heavey his chief executive salary, benefits and incentive payments for his first six months as non-executive chairman.
Claxton said the firm has voted against the remuneration report, remuneration policy and the election of the chairman of the remuneration committee over its ongoing concern that pay is too focused on the short term.
"The company has set a performance target to return to the FTSE 100 which is an inappropriate condition, as executives should be focused on running an effective business first and foremost. We are also uncomfortable with the significant amount of discretion available to the remuneration committee under the new policy," Claxton said.