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Heritage Oil suffers shareholder rebellion

Category : Business

Nearly half of shareholders fail to support the remuneration report despite the chief executive controlling 33% of the shares

Heritage Oil has endured a stinging rebellion against its pay policy with nearly half of shareholders failing to support the remuneration report – despite the chief executive, former mercenary Tony Buckingham, controlling 33% of the shares.

The FTSE 250 exploration and production business which is active in Kurdistan, Africa and Russia, got the agreement of holders of 140m shares to the pay arrangements but holders of nearly 27m voted against and holders of a further 90m shares either abstained or did not vote.

That gave Buckingham more than 80% of the votes cast.

Other resolutions such as one which gave directors authority to “allot shares” were also subject to significant shareholder rebellions with over 30% of those who participated voting against.

Heritage declined to comment after the meeting, held at the offices of its lawyers on Jersey, where it is registered, but sources said the board was unlikely to be influenced by the opposition.

Ahead of the meeting the company attracted heavy criticism from shareholder bodies such as the Association of British Insurers which issued a “red-top” alert in objection to the two-year notice period for its executive directors. Investors prefer directors to have 12-month contracts.

Pensions Investment Research Consultants (Pirc), another shareholder adviser, urged investors to oppose Heritage’s remuneration report, criticising the notice periods and Buckingham’s £1.36m pay package, which included an annual bonus of £531,600.

Pirc said before the annual meeting that directors’ bonuses were “astonishing” for a year in which the company racked up losses of $66.9m (£44m), lost over two thirds of its share price in 18 months, and was in dispute with the Ugandan Revenue Authority and Tullow Oil over approximately $400m of tax liabilities.

Heritage Oil has previously acknowledged that the policy, which applies to Buckingham and chief financial officer, Paul Atherton, defies the London Stock Exchange’s best practice recommendations.

But it said the notice periods were put in place contractually before the company listed on the stock exchange in 2008 and people were wrong to judge oil explorers in the way they did other businesses such as insurance.

The Heritage rebellion is just the latest in a series which have swept through Britain’s leading companies in what has become known as the “shareholder spring”.

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