Gulf Keystone chairman under fire as shareholders wage war

BRITISH oil business Gulf Keystone Petroleum yesterday remained at war with one of its biggest shareholders, after rejecting the investor’s preferred candidates for the board.

The company said it did not want to employ any of the four proposed independent directors put forward by activist investor M&G Recovery Fund. It advised shareholders to reject the proposed appointments in a vote at next week’s annual general meeting.

M&G, which owns 5.1 per cent of Gulf Keystone’s shares, is also now heaping pressure on the company to reveal details of new chairman Simon Murray’s pay deal.

Murray, a former foreign legionnaire, was only hired earlier this month to work alongside chief executive Todd Kozel. Gulf Keystone has said Murray will not receive shares, but has not disclosed his remuneration.

“While we welcome the split of the roles of chief executive and chairman, it is vital that the new chairman is truly independent. A reward of share options would be contrary to this,” said M&G in a statement.

In an effort to stave off shareholder anger, Murray is planning to call in third party consultants to review the company’s pay and incentive schemes.

An attempt to hold clear-the-air talks between the two parties last Friday was not successful and sources close to Gulf Keystone told City A.M. that there is now “no plan” to have another meeting with M&G before the AGM on 25 July. The source also insisted the oil company is already doing enough to improve corporate governance standards.

“The company doesn’t believe that the four candidates proposed by M&G are suitable in terms of either relevant experience or independence,” they said.

M&G believes Gulf Keystone, which is planning to move from Aim to the main London market, pays its top executives too much and does not have enough experience on the board.

In an official statement Gulf Keystone – which mainly operates in the Kurdistan region of northern Iraq – said candidates do not have “the consistent track record of successful operational and commercial experience, in any sector, that is required for a FTSE 250 sized company”. It added that Jeremy Asher, one of the candidates, had been a “disruptive presence” on the board during a previous stint as director until 2010.

The company is now pushing ahead with plans to recruit its own non-executive directors and has held first round interviews. Candidates include Andrew Simon, a non-executive at Travis Perkins and former deputy chairman of Dalkia, an energy management company.