Tullow Oil, the Africa-focused energy company, may have passed one significant hurdle on Tuesday, when it announced solid take-up of a £607m rights issue to pay down debt.
But the London-listed oil explorer has another barrier to jump on Wednesday at its annual meeting, when its shareholders will be asked to approve the elevation of its founder and chief executive Aidan Heavey to the chairman’s seat – a move that goes against corporate governance best practice.
One shareholder, Royal London Asset Management, which holds a 0.95 per cent stake in Tullow, has signalled that the company may be made to sweat a bit over its boardroom plans.
Royal London said on Tuesday afternoon that it is opposing Mr Heavey’s appointment as chairman and has also voted against the company’s remuneration report.
Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, said the proposed change in role for Mr Heavey “is a clear violation of an important corporate governance principle, designed to protect shareholders and ensure effective independent oversight of the company’s management”.
Tullow explained the decision was motivated by the “unique nature” of its business and said a “phased transition” in leadership was required, although it also stressed Mr Heavey would not serve as chairman for more than two years.
Royal London is also objecting to the pay proposals for Mr Heavey, whereby he will continue to receive the full pay and benefits he was awarded as CEO for six months after becoming chairman.
Mr Heavey is handing over the reins to Paul McDade, currently the company’s chief operating officer.
On Tuesday Tullow announced its deeply discounted rights issue was 95.3 per cent subscribed.