Proxy advisory firm Institutional Shareholder Services (ISS) on July 25 urged Occidental Petroleum Corp. shareholders to ask management to let them weigh in on board and governance issues as the company buys rival Anadarko Petroleum Corp.
The request comes one week after the takeover deal's biggest critic, billionaire investor Carl Icahn, laid out plans to shake up Occidental's board.
ISS issued a research note on July 25 recommending that shareholders provide consent for the request to fix a record date, which would determine which shareholders would be able to have a say on possibly electing dissident directors.
The note, written by Cristiano Guerra, who heads ISS's special situations research group, also says ISS is not backing Icahn's nominees or planned changes.
Occidental said it disagreed with ISS’s recommendation that shareholders should take the first step and request the fixing of a record date for the consent solicitation and only later focus on whether the Icahn Group’s proposals would harm or further shareholder interests.
"The board of directors has unanimously determined that fixing a record date for the Icahn Group’s planned consent solicitation and the proposals the Icahn Group intends to ask shareholders to act on are NOT in the best interests of Occidental or our shareholders," the company said in a statement.
Shareholders were prevented from commenting on the company's "transformational and controversial transaction" with Anadarko, the ISS note said, and should be given a voice on such issues before next year's annual general meeting. "There seems to be sufficient reason to address these concerns now, rather than waiting until the 2020 AGM."
A week ago Icahn, a who owns 4.4% of Occidental and has become the most vocal critic of the $38 billion takeover of Anadarko, filed a solicitation statement with U.S. regulators. He wants to replace four board members with two of his employees and two executives who have financial and oil industry expertise.
Icahn has criticized Occidental CEO Vicki Hollub for the company's financial record and for seeking outside financing for the deal from billionaire investor Warren Buffett that did not require shareholder approval.
In order to provide consent, Occidental's investors, including mutual fund firm T. Rowe Price among others, must provide a record date request Form and answer a questionnaire that includes their trading history in Occidental stock. They also must instruct their depository trust company to take actions on their behalf.
Because shareholders cannot vote on this transaction, "along with the self-evident complexity of the consent solicitation process, suggests that a more open and thorough debate regarding Occidental's strategic direction and overall governance would be beneficial," the ISS note said.
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