6 hours ago
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BP has fresh faces in the boardroom and a rigged strategy: it’s pivoting back to oil and gas and away from its low-carbon assets in an attempt to improve a weak share price. One can agree or disagree with the approach. But it was a silly act of overreach for a newish chair to try to stifle debate on such matters.
That, in effect, was what Albert Manifold did when he excluded a resolution for Thursday’s annual meeting from Follow This, a Dutch investor group. The proposal itself cannot be described as explosive. It was pitched in investor-friendly terms and would merely have obliged BP to describe how it would protect shareholder value if demand for oil and gas falls. Nor is Follow This some two-bob outfit within the ranks of climate groups. It was claiming support from investors with $1tn under management.
BP’s reaction to the submission, however, was to speak to its lawyers. “The board, having taken legal advice, concluded that the proposal from Follow This was not valid and would be ineffective were it to pass,” Manifold declared without offering a reason for the supposed lack of validity. Come on, if it was something to do with the proposal not being filed as a “special” resolution requiring 75% support, as has been suggested, just use common sense to get it on the agenda in some form. There’s always a bit of negotiation in these cases.
Compare the approach of Shell when presented with a near-identical resolution from Follow This for its annual meeting next month. At the UK’s bigger oil and gas company, the chair, Andrew Mackenzie, allowed the motion to go forward without a fuss. The notice of Shell’s meeting devotes a full page to the proposers’ resolution and supporting statement and another page to the directors’ explanation of why they recommend a vote against. That is the grown-up and confident style: address the points and let the owners have their say.
Shell’s counter-arguments included: scenarios are not forecasts and are updated constantly; and the company already publishes enough information about break-even points, demand sensitivities and so forth to enable investors to make informed judgments about financial resilience. It is hard to see why BP couldn’t have done the same.
Manifold’s obstinacy seems to have fuelled rebellions on some of the company’s own resolutions, notably one that would have abolished BP-specific requirements on climate impact reporting that were adopted in 2015 and 2019 and are now regarded by the board as duplicative. On that one, BP got support from only 47% of voting shareholders when it needed 75%. On a plan to abolish in-person annual meetings, BP also lost.
Most embarrassingly, 18% of votes were against the re-election of Manifold himself, which is a stinker of a result for a chair on his first outing. Legal & General Investment Management, a top-10 investor, was in the “no” camp and cited the non-admittance of the Follow This resolution as one reason why.
The wonder is that BP’s boardroom still includes some heavyweight non-executives, including the Aviva boss, Amanda Blanc, and the former Barclays finance director Tushar Morzaria. They must surely have known a heavy-handed approach to shareholder democracy could backfire. Did they warn the chair? Or is it true, as some say, that BP is now the Albert Manifold show?
As it happens, his “simpler, stronger, more valuable” strategy for BP probably has broad majority shareholder support, just as a similar one at Shell does. The point, though, is that you’ve still got to let debate flow and set out arguments. Manifold deserved the kick he got.
