Karoon shareholders Samuel Terry, Sandon to defy board at AGM
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The news: Two Karoon Energy shareholders, including its second biggest investor Samuel Terry Asset Management (STAM), have indicated that they intend to vote against five of the nine resolutions at the oil and gas company's upcoming annual general meeting.
The numbers: STAM, which holds a 5.02% stake in Karoon, has formed an association with Sandon Capital, which owns a 0.42% shareholding, ahead of the AGM scheduled for 23 May.
Karoon shares were down 1.57% to $1.88 by 2:01pm AEST and over the last 12 months has dropped 6.62%.
The context: Karoon confirmed that STAM and Sandon will vote against new performance incentives for its managing director and CEO Julian Fowles, the adoption of its tabled remuneration report for the transitional FY23, and a 25% increase to the aggregate fee pool for non-executive directors.
STAM said it believes Karoon's incentives structure is "illogical", noting that short-term incentives should be more heavily weighted to production, which the asset manager cited as "the single most important factor capable of driving shareholder value".
STAM and Sandon will also oppose the proposed re-election of director Peter Turnbull, who has served the company as an independent non-executive director since 2014. STAM said that Turnbull has "permitted years of negative cashflow", "tolerated poor governance", and "presided over the setting of illogical incentives for management" during his time at the company.
The two shareholders will also oppose an increase to the number of equity securities Karoon can issue without shareholder approval in the 12 month period following last year's equity raising to fund its purchase of oil and gas assets in the Gulf of Mexico.
STAM flagged that the acquisition and associated equity raising has seen a downturn in Karoon's share price. Karoon noted that it was developing a shareholder returns approach in line with its strategy and capital allocation framework. The framework would be announced in July 2024.
In a letter to shareholders, Karoon chair Peter Botten said the board remains unanimously in favour of all nine resolutions. He noted the two shareholders intend to support the board's resolution to re-elect non-executive director Carlos Tadeu da Costa Fraga. However, they remain undecided on the re-election of directors Melissa Holzberger and Joanne Palmer.
What they said: Botten said: "Karoon welcomes different ideas and respects the right of any shareholder to adopt a contrary view to the board and to seek to advance that view with other shareholders. However, given the upcoming AGM, I believe it is important that I, on behalf of the board, provide our perspectives and address STAM and Sandon's issues which are driving their decisions on how to vote on the board resolutions".
The sources: ASX announcement, ASX announcement, Samuel Terry report
