Last week, the board of BP plc announced the removal of its chair, Albert Manifold, citing “serious concerns” related to “important governance standards, oversight and conduct”.
Manifold and the board have given different explanations, but it follows a vote to remove him at the company’s annual general meeting only a month earlier over similar concerns.
BP is currently the tenth largest company in the UK by market capitalisation, at just under US$110 billion. The shares fell some 5.5% after the announcement of Manifold’s ouster.
Around 18% of BP shareholders at the AGM on April 23 voted against his re-appointment as chair after proxy advisor Glass Lewis said he was ultimately responsible for excluding a resolution filed by climate activist group Follow This from the meeting. The group had called on BP to discuss how its current strategy would perform given declining demand for oil and gas.
According to Glass Lewis, Manifold’s decision “further raises questions about transparency, shareholder communication, and responsiveness to shareholder concerns”.
Such a recommendation is rare from a shareholder advisory firm.
Manifold had been BP’s chair since last October, when he was brought in to replace Helge Lund over similar shareholder dissatisfaction. Reuters has since reported that Manifold was ousted partly due to private meetings with Elliott Management, another activist fund, circumventing the BP board.
Although Glass Lewis offers climate information solutions among its services to investors, it is by no means an environmental pressure group, and acts on behalf of institutional investors. Elliott Management favoured Manifold’s pro-fossil fuels strategy.
BP’s attempt to pivot back to petrochemicals, however, looks increasingly troubled. The Follow This resolution highlights that climate change issues will not go away. And the scenario which the resolution raised, of performance amid declining oil and gas demand, now looks increasingly close to consensus.
Exactly how or whether major energy firms can participate in the transition to a more electrified global economy is still a serious open question. Extensive distribution networks are surely assets that could be leveraged. Unfortunately, BP seems to be succeeding mainly in demonstrating how to get it wrong.
