Concerned InterOil Shareholders group has requisitioned a special meeting of InterOil Corporation’s shareholders. At the special meeting, shareholders will be asked to approve several resolutions focused on improving corporate governance of InterOil Corporation (NYSE:IOC).
The proposed resolutions aim to improve corporate governance and provide greater transparency to all shareholders. The Group calls for changes to ensure management compensation is aligned with value creation, improvements in director competency, and to institute third party reviews of reserves, resources and development plans. Concerned InterOil Shareholders believe shareholders should approve all transactions over 10% of total asset value to ensure greater alignment with shareholder interests.
The Requisition proposes resolutions addressing the following matters, be put to a vote by InterOil’s shareholders:
- reducing the size of the InterOil board of directors (the “Board”) from ten to six, which the shareholders may specify under the Company’s By-laws. The Concerned InterOil Shareholders believe that the Company’s current ten-member Board is too large and expensive for a company with no operations and that reducing the size of the Board and aligning it more with shareholder interests through the other proposals in the Requisition would more efficiently use the Company’s capital and other resources and enhance shareholder value going forward;
- requesting the Board to amend InterOil’s compensation policy to ensure industry best practices and align director and management compensation with shareholder value accretion by limiting the cash component of director compensation, imposing holding periods on equity compensation and restricting “change of control” cash payments to senior managers;
- requesting the Board to amend InterOil’s policy on qualifications of Board nominees to increase focus on core competencies related to InterOil’s onshore oil and gas assets in Papua New Guinea by requiring that at least one-third of the directors have direct experience in exploration and development of such assets. In the Concerned InterOil Shareholders’ view, having proven PNG expertise in a significant number of the directors would enhance the Board’s ability to supervise and direct management’s choice and execution of exploration and development projects in Papua New Guinea;
- requesting the Board to amend the manner and extent of required third-party reviews of InterOil’s reserves and resources to strengthen and include review of management’s discovery announcements and development plans so that shareholders and the public may more fully understand InterOil’s operations. The Concerned InterOil Shareholders believe that this enhanced third-party review will increase the transparency of the Company’s disclosure about its resources/reserves and discoveries; improve the quality and objectivity in the Company’s decision-making process in determining whether and how to explore and develop its assets; improve management accountability to shareholders; and reduce the likelihood that the Company’s capital and other resources will be spent on exploration and development projects that are unlikely to be commercially viable;
- requesting the Board to amend its charter to require shareholder approval of transactions over 10% of total asset value to help ensure that in the future, material transactions are more aligned with the interests of InterOil’s shareholders. The Concerned InterOil Shareholders believe that certain recent material transactions the Company has undertaken without Shareholder approval, including the transaction with TOTAL S.A., have been non-accretive for Shareholder value. To help ensure that future material transactions are aligned with the interests of Shareholders, the Concerned InterOil Shareholders believe that the Board and management should be required to obtain prior Shareholder approval of material transactions in order to avoid transactions that, among other things, may impair the Company’s capital or its ability to undertake its core operational business of exploration and development of upstream oil and gas in Papua New Guinea, or that trigger payments of transaction break-up fees through failure to secure Shareholder approval of the transaction; and
- requesting the Board to adopt and comply with a rigorous disclosure policy to further increase transparency and consistency in public disclosure and accountability of the Board and management to shareholders.