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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Chevron Raises Dividend, Matching ExxonMobil's Percentage Boost

Oil company Chevron Corp. raised its quarterly dividend by 11%, with the size of the percentage increase matching what larger peer Exxon Mobil Corp. announced earlier Wednesday.

Chevron will pay a quarterly dividend of $1 per share to holders of common stock as of May 17. The increase will cost Chevron roughly $194 million quarterly.

Chevron, which is due to release first-quarter results Friday, earlier this month disclosed its U.S. and international production declined in the first two months of the year compared with the previous quarter, in part reflecting maintenance activity.

Analysts surveyed by Thomson Reuters expect Chevron will report a 12% jump in first-quarter sales, though per-share earnings are expected to drop 4%.

Exxon's first-quarter results, meanwhile, are scheduled for Thursday.

Chevron's shares, which have risen 9.4% to $118.28 in 2013, were inactive in after-hours trading.

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Saipem Unexpectedly Cuts Dividend As Net Profit Drops 30%

Italy's Saipem SpA Wednesday unexpectedly cut its 2012 dividend by 2.9% because of lower earnings, after the oil services company lost more than a third of its market capitalization last month when it slashed earnings guidance.

Saipem also said fourth-quarter net profit fell 30% on the year, more than expected, as the performance of its onshore engineering and construction operations worsened because of low-margin contracts signed in a highly competitive market.

The company said it plans to pay a dividend per share of 0.68 euro ($0.92) on 2012 earnings, down from EUR0.70 in the previous year.

Fourth-quarter net profit slipped to EUR180 million, from EUR258 million in the same period in 2011, while revenue rose 0.3% to EUR3.42 billion.

Operating profit fell 22% to EUR318 million over the period.

A survey of six analysts polled by Dow Jones Newswires had expected an average fourth-quarter net profit of EUR200.5 million on revenue of EUR3.28 billion, and an operating profit of EUR359.3 million. The dividend had been forecast at EUR0.70 a share.

Milan-based Saipem, which is controlled by oil company Eni SpA, has been in the spotlight in recent months after it announced in December that it was being investigated by Italian prosecutors over possible corruption involving some Algerian contracts. Saipem denied any wrongdoing.

Two weeks later, Saipem shocked investors by reducing 2012 earnings guidance and indicating a gloomy outlook for this year. The sudden change came after months of assurances that the company was optimistic over earnings.

Wednesday, the company confirmed 2013 guidance for a net profit of about EUR450 million, operating profit around EUR750 million and revenue of EUR13.5 billion. It said this will be a "significant" reduction on the year and it will be mainly from the engineering and construction sector.

On a positive note, Saipem said it expects the drilling sector to grow.

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Active Income Portfolio reaps dividend rewards

The purchase of Henderson Far East Income (HFEL), brought into the active income portfolio last month, might on the face of it seem an odd decision given the stellar performance of some other Asia-Pacific income funds.

The investment trust has managed a 47% return over five years and a 19.7% rise in 2012 to date, but that performance still lags the returns of the sector leaders. Aberdeen Asian Income (AAIF), the sector leader, has returned 132% over five years, while Schroders Oriental Income has achieved 89%.

Both outperform Henderson in terms of the value of their underlying assets. Aberdeen's 70% rise in net asset value (NAV) far exceeds Henderson's 10% NAV rise, as does Schroders' 32%. However, buying top performers trading at a premium to NAV carries its own risks: investors will pay a 4.35% premium for Aberdeen and a 2% premium for Schroders. And while these sector leaders yield under 4%, Henderson brings in more than five.

That income deficit may seem irrelevant in the context of the far superior total return, but it isn't. The danger for market leaders in any fund or trust sector is of a reversion to the mean, something that is particularly likely in fast-changing Asian markets.

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