Gulf Keystone Boardroom Row Escalates

on Jul 15, 2013
Listen, Monday, July 15th: AIM-listed oil driller Gulf Keystone Petroleum Limited (LON:GKP) stepped up its corporate governance row with US fund manager M&G Recovery Fund over the weekend, recommending that shareholders reject M&G’s board nominees. Gulf Keystone’s share price, which closed 6.50 percent higher on Friday, shed nearly four percent in early London trading today.

**Gulf Keystone Urges Rejection of M&G Candidates**
On Saturday, the Iraqi Kurdistan-focused explorer said in a statement that senior board members had met with M&G representatives and interviewed three out of the four nominees and had concluded that the candidates did not have the right knowledge and experience.

Gulf Keystone noted that the M&G nominees Philip Dimmock, John Bell, Thomas Shull and Jeremy Asher lacked “the consistent track record of successful operational and commercial experience, in any sector, that is required for a FTSE 250-sized company”. Gulf Keystone is currently seeking to move from AIM to full listing.

“Following the meeting, the board unanimously recommends shareholders to vote against all of the proposed M&G candidates,” the company said in the statement.
Gulf Keystone also accused Jeremy Asher, one of the four M&G candidates, of being a “highly disruptive presence” before being “removed” from the board three years ago. Gulf Keystone also pointed out that as a shareholder with a 1.71 percent stake Asher would not be independent.

**Corporate Governance Row**
M&G, which holds a 5.1 percent stake in Gulf Keystone, also issued a statement on Saturday, reaffirming its intention to vote for the four candidates believing them to have the relevant experience and knowledge. “M&G is not seeking representation on the board of GKP, nor has any wish to interfere with its operations,” the fund manager claimed, adding that it was not asking for any special relationship with the four candidates but wanted “purely to strengthen corporate governance” at the company.

As The Telegraph has commented, M&G is unhappy about a series of boardroom issues ranging from the absence of independent directors to the size of pay and perks, including last year’s £15 million pay package for chief executive Todd Kozel at a time when Gulf Keystone was losing money. The fund was also concerned about the terms related to the appointment of former Glencore chairman Simon Murray as independent chairman.

!m[Shareholders to Decide Corporate Governance Dispute](/uploads/story/3961/thumbs/pic1_inline.PNG)
Murray is to call in third party remuneration consultants to review Gulf Keystone’s pay and incentive policies in an attempt to placate shareholders ahead of the annual meeting scheduled for July 25, the
Financial Times has reported.
According to an unnamed company source quoted by The Times, the dispute could be resolved by further negotiations prior to the shareholder meeting. “We’ve started the process of bringing in good people,” the source has told The Times. “The appointment of Murray signals that.”
**Gulf Keystone’s share price was 3.97 percent down at 169.25p in London as of 08:51 BST on 15 July 2013.**


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