Shareholders express their opinions at annual meetings

t’s a relatively slow time for the energy industry and much of the state as school is out, the Legislative session is over — at least for now — and people are taking summer vacations.

It’s also annual shareholder meeting season.

Annual meetings provide an opportunity for any shareholder to speak to executives, express an opinion about the direction of the company and propose minor or major policy changes for the firm.

The drama varies from time to time and company to company based on many factors, including stock price, national trends and shareholder activism.

A few years ago, activist shareholders exerted great influence over Oklahoma City-based Chesapeake Energy Corp. and SandRidge Energy Inc., ousting the company founders and leading to massive changes throughout the companies. At the time, executives and managers at other local firms expressed concern that they could be next.

This year, however, the meetings have been much less dramatic, although still important and informative.

One theme seen at several local companies and many of the oil and natural gas industry’s largest firms is a focus on environmental disclosure.

Devon Energy Corp. shareholders proposed four motions. All of the motions were opposed by the company board, and all failed. But several gained sizable support.

A proposal for the company to provide a report on public policy advocacy related to energy policy and climate change gained support from 26 percent of the vote.

A proposal for an assessment on the impact of global climate change polices attracted 40 percent of the vote.

A proposal for a report on the company’s lobbying policy and activity was supported by 35 percent of the voted shares.

And a proposal to study separating reserve replacement from executive bonuses garnered only 6 percent of the vote.

In the proxy materials distributed to shareholders, Devon directors argued that much of the requested information already is publicly available.

“We listen to all of our shareholders, whether they may win a shareholder proposal or not,” Devon CEO Dave Hager said in an interview after the annual meeting. “We think input from all of them is important. We’re very proud of our track record on this. We will weigh their viewpoints and consider their viewpoints in our future actions.”

Continental Resources Inc. has faced similar proposals, but shareholder proposals that go against board recommendations at Continental are much more difficult to pass. Chairman and CEO Harold Hamm controls more than 76 percent of the company stock, meaning his opinion always is the winning opinion, unless he recuses himself from a particular vote.

A shareholder proposal said the board’s all-white, male membership is not representative of its shareholders or employees and requested that the board consider more diverse candidates when making recommendations.

The board recommended against the proposal, stating the company’s “current director nomination process allows for identification of the best possible nominees for director, regardless of their gender, race, color, religion or national origin.”

SandRidge Energy last week held its first annual meeting since emerging from bankruptcy reorganization in October. During the court process, SandRidge canceled its common stock and issued new shares to its former lenders. The new company had no shareholder proposals at its annual meeting.

CEO James Bennett said the company and its executives have focused on environmental compliance.

“We spend a lot of time and money and manpower to make sure we don’t have accidents and problems,” he said. “We’re very good at operating safely.”

I missed Chesapeake Energy Corp.’s annual meeting this year for the first time since I returned to five years ago. The meeting was held at the same time as my daughter’s sixthgrade graduation.

Chesapeake’s meeting this year was far less dramatic than those from several years ago. The company had no shareholder proposals this year.