Transocean Wins Dividend Battle with Icahn at Annual Meeting

on May 20, 2013

Transocean Ltd (NYSE:RIG) shareholders turned down the dividend proposal of billionaire investor Carl Icahn at their annual meeting on Friday, May 17 but endorsed one of his three board nominees.

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Transocean’s share price closed 1.3 percent lower on the NYSE on Friday and was also marginally down in morning trading on May 20.
**Shareholders Approve Board’s Dividend Proposal**
Excluding Icahn Group’s shares, more than 75 percent of the total votes cast in favour of a dividend at the meeting supported the board’s proposal of $2.24 per share, the Switzerland-based offshore oil-and-gas driller said in an e-mailed statement. Icahn, who had proposed an annual dividend of $4 per share in January, owns a 5.6 percent stake in Transocean.

Bloomberg quoted Luke Lemoine, an analyst at Capital One Southcoast Inc, as saying that the vote “was definitely a win for Transocean because they get the $2.24”, adding that “four dollars was pretty pushy”. Transocean has previously said that Icahn’s dividend proposal provided “clear evidence of his lack of understanding of the capital-intensive and highly cyclical nature of the offshore drilling industry”.

Transocean’s share price closed 1.3 percent lower at $54.03 in New York on May 17, and was 0.06 percent down at $54.00 in pre-market trading as of 8:44 EDT on May 20.
**Board Changes**
Transocean’s shareholders approved one of Icahn’s three board nominees, namely Samuel Merksamer. The board has previously called Merksamer “inexperienced” and “overboarded”, doubting whether he would have enough time for Transocean given that he is currently sitting on five public company boards and one non-public board, and had a full-time position at Icahn Capital.

Shareholders rejected Icahn’s two other board candidates, voting in favour of company-backed nominees Robert Sprague and Thomas Cason. Transocean’s chairman, Michael Talbert, was not re-elected. Prior to the vote, Talbert said that he would step down as chairman by a November board meeting.
Reuters quoted Icahn as saying that the shareholders had “sent an unequivocal and vocal message to the incumbent directors and management, by voting out the chairman, that immediate discipline must be brought to all fiscal and capital allocation decisions”.

!m[Shareholders Approve One of Billionaire’s Three Board Nominees ](/uploads/story/2384/thumbs/pic1_inline.png)
Meanwhile, Transocean viewed the shareholder support for its dividend payout and the backing for its two directors up for re-election as a vote in its favour. “Their approval of the company’s dividend and Board nominees is an endorsement of our balanced approach to value creation which includes maintaining a flexible balance sheet characterised by an investment grade rating on our debt,” the company said in the statement.
Transocean also noted that there were not enough shareholders present to vote on a proposal by Icahn Group to elect all board members every year rather than every three years, so the proposal was rejected.
**Transocean’s share price was 0.78 percent down at $53.61 in New York as of 10:39 EDT on 20 May 2013.**


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