Transocean Shareholders Reject Icahn's Dividend Proposal

Transocean Ltd. shareholders voted overwhelmingly Friday to reject a $4 a share dividend proposal by activist investor Carl Icahn but ousted long-time company Chairman Michael Talbert and added one of Mr. Icahn's candidates to the offshore drilling giant's board of directors.

"I'm glad the shareholders took a reasonable and thoughtful approach to the issues and voted overwhelmingly in favor of our business model," Transocean Chief Executive Steve Newman said in a phone interview following the company's annual meeting in Zug, Switzerland.

Nearly 75% of shareholders, not including Mr. Icahn's shares, voted against the $4 dividend, Mr. Newman said.

Mr. Newman said that Sam Merksamer, one of three director candidates recommended by Mr. Icahn, was elected against Mr. Talbert. Mr. Newman said that despite the difference of opinions between the board and Mr. Icahn, it won't be an issue to add Mr. Merksamer to the board. "We welcome Mr. Merksamer to the board," Mr. Newman said. The board will meet Friday to change committee assignments to include the new member.

Investor advisory firms Institutional Shareholder Services and Glass, Lewis & Co. both backed a smaller dividend announced by the company and recommended replacing Mr. Talbert, despite an announcement earlier this week that if re-elected, he would step down in the next year. It was a move by Transocean that appeared to be aimed at appeasing shareholders frustrated with the company's lagging performance while preventing Mr. Icahn's candidates from winning board seats.

Mr. Icahn first revealed his stake in the world's largest offshore oil and gas driller in February. He argued Transocean has underperformed its peers in total shareholder returns over the past five years due to a litany of poor investment decisions.

Analysts and Mr. Icahn have said some of the problems could be blamed on the 2010 Deepwater Horizon accident, in which a Transocean rig leased by BP PLC exploded, killing 11 and leading to the largest oil spill in U.S. waters.

But Mr. Icahn argues there were problems that preceded the accident, including paying too much to purchase rival Global Santa Fe in 2007, an acquisition that the company says helped it become the largest offshore driller in the world.

Mr. Icahn also criticized the fact that the company unexpectedly had to issue debt and equity to cover the 2011 acquisition of rival Aker Drilling.

Transocean's Mr. Newman has acknowledged some of the troubles, but argued that Mr. Icahn's recommendation to focus on an oversized dividend ignored the realities of the offshore drilling business, namely that companies need to continue to invest in their offshore drilling fleets while keeping the balance sheet strong enough to weather expected down cycles in the oil and gas business.

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Apache Shareholders Don't Approve Executive Compensation

Apache Corp. shareholders didn't approve the energy company's executive compensation plan for 2012 at its annual meeting Thursday, making their displeasure with the company's performance known.

Fewer than half of the voting shareholders, 49.8%, voted for the compensation plan for named executives. The vote Thursday is advisory and the board has no legal obligation to make changes to the 2012 pay package.

Apache spokesman John Roper said the company sees the vote as a comment on share performance. Apache shares are down 7.3% from a year ago. Shares fell 1.2% to $80.89 Thursday.

"We want to see our performance improve as well and to do so we need to hit 3% to 5% percent growth and execute our plan. We believe we have the right plan in place to do that," Mr. Roper said.

Apache has said it plans to sell $4 billion in assets this year to focus on North American onshore production, which it thinks will provide the best return, and to rid itself of land that hasn't been as profitable as it hoped. It will use the proceeds to pay down debt and buy back shares.

Chief Executive Steven Farris said during the meeting that he believes the company's share price has lagged because it has fallen short of production expectations and because of anxiety over its position in Egypt.

"We've got a great company, we do a great job, but in the last four or five quarters, we haven't done what we said we were going to do," he said. "We have missed estimates, and we cannot make commitments to shareholders we don't meet."

Praveen Kumar, executive director of UH Global Energy Management Institute at the University of Houston's C.T. Bauer College of Business, said the board doesn't have to do anything in response to Thursday's vote, but it might want to, as such a vote can indicate that shareholders are united in their dissatisfaction. Last year over 95% of shareholders voted to approve the company's executive compensation for 2011.

"It is probably a kid of firing across the bow, indicating to the board that there is shareholder resistance," Mr. Kumar said.

Also at Thursday's meeting, shareholders elected three directors to Apache's board.

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