As the saying goes, “It’s all over – but the shoutin’.” And BP heard plenty from shareholders at its annual meeting in London last week.
Nearly half of the shareholders who voted last week either abstained or voted against the reappointment of BP Safety Committee Chair Sir William Castell, compared to last year when only 2% withheld support for him. According to shareholders, 25% abstained or voted against the company’s remuneration report, and 15% abstained or voted against the company’s accounts and reports. The action was well coordinated among unions, pension funds, churches and socially and environmentally responsible funds holding millions of shares who found BP’s annual report seriously lacking in its response to the fatal explosion of its Deepwater Horizon oil rig that killed 11 men and fouled the Gulf of Mexico coastline for hundreds of miles.
“BP’s recently released annual report provides shareholders with an insufficient level of detail to determine how the company’s safety and risk management function has been strengthened; how it is being evaluated, managed, and mitigated; how the board will oversee it; and how progress is to be assessed and measured,” an international coalition of shareholders, led by Christian Brothers Investment Services, Inc (a socially responsible investment firm with $4 billion under management for Catholic institutions), MMA Praxis Mutual Funds, Ethos Foundation, church groups and other investors.
BP’s lack of risk management disclosure, the dissenters say, forced them to recommend that shareholders vote against or to abstain from voting on BP’s annual ballot items particularly the reappointment of BP’s Safety, Ethics and Environmental Assurance Committee (SEEAC) as a symbolic protest. The country’s largest pension fund, Calpers, the California State Employees Retirement System, voted its 59,134,624 shares against accepting BP’s accounts and reports and against director nominee Sir William Castell, “in consideration of his role as chair of [SEEAC] in the period running up to the Gulf of Mexico disaster,” Calpers said on its web site.
“Calpers is concerned with the absence of information related to key performance indicators and re-evaluation of the board’s role in oversight of risk management,” they wrote in explaining their rejection of BP’s accounts and reports.
Not surprisingly since much of its coastline suffered horribly from tides of oil, the Florida State Board of Administration, which runs the Florida State Workers Pension Fund, joined with Calpers in the same negative votes. Together they hold nearly 83 million shares. According to recent filings, BP has 3.13Bn shares outstanding.
AFSCME, the American Federation of State, County, and Municipal Employees, rejected BP’s remuneration report, the reappointment of Castell and the reappointment of Carl-Henric Svanberg, BP’s Chairman of the Board.
Glass Lewis, an advisor to institutional investors that collectively manages more than more than $17 trillion in assets, and PIRC, a UK-based research and advisory consultancy on corporate governance and social responsibility, both part of the international coalition, advised against voting for the report, the remuneration, and the Chair of SEEAC, Sir William. Among the ten largest BP shareholders, FMR and T Rowe Price, who combined hold about 48 million in BP shares (worth over $2 trillion), declined to comment before the vote, as did a BP spokesman.
On the whole, decorum seems to be the chosen strategy for the coalition. Mark Regier, Director of Stewardship Investing at MMA Praxis Mutual Funds, which considers stewardship investing and active involvement in a range of issues, from child slavery in the cocoa fields of West Africa to the cotton fields of Uzbekistan, tells Institutional Investor he is hopeful that Dudley will appoint someone to oversee implementation of the Bly Report.
“We do believe that Bob Dudley is committed to attempting to find an independent expert to oversee the implementation of the Bly Report recommendations,” Regier wrote in an email following the annual meeting, questioning the BP chief’s use of the word “try” in his statement.
“We understand that finding the right person for this significant undertaking will pose challenges, but believe it is achievable – and extremely important,” replied Regier. “BP’s own recent experience at Texas City underscores this fact. We will intend to underscore this belief in our meetings with Mr Dudley and senior BP management in the months ahead.”
Earlier this year, Regier had planned to present some research about BP at the end of January. However, he chose “to withdraw the research for this year,” in exchange for time during the Q&A at the meeting. BP agreed. “We had a representative in London,” he says. Regier plans to meet with two of BP’s high officials in May and again in the fall.
According to voting results, posted on the Christian Brothers’ website, www.cbisonline.com, ten members of the international coalition voted to abstain or voted against the BP Annual Report.
15% abstained or voted against the Chair of BP’s Board, Carl-Henric Svanberg.
25% abstaining/voting against the remuneration proposal;
25% abstaining/voting against the remuneration proposal;
16% abstaining/voting against SEEAC Committee member, A. Burgmans;
15% abstaining/voting against the company’s accounts and reports.
