By Braden Reddall
May 13 Transocean Ltd said on Monday
that Chairman Michael Talbert will step down later this year, in
a move that comes just days before the culmination of a fight
between the offshore driller and investor Carl Icahn in which
Talbert was a target.
Talbert, a director since 1994 who was also chief executive
from 1994 to 2002, told the board that if re-elected at the
upcoming shareholder meeting on May 17, he will step down as
chairman by November and leave the board no later than the 2014
annual meeting, Transocean said.
Icahn, who owns 5.6 percent of Transocean, has opposed
Talbert's re-election. The activist investor has been
campaigning for a higher dividend payout for months and is
calling for major changes to the Switzerland-based company's
board ahead of the annual meeting.
"We find it to be utterly absurd that a Chairman facing the
prospect of losing his directorship would be so brazen as to ask
shareholders to return him as Chairman so that he and the Board
can then pick his successor," Icahn wrote in a letter to
Transocean shareholders on Monday.
Talbert's exit strategy caps a tumultuous meeting season for
long-serving bosses in the energy business. On Friday, John Hess
was stripped of his chairman duties at Hess Corp, just a
week after Occidental Petroleum Corp Chairman Ray Irani
was voted out after two decades at the top.
Icahn has gone after Transocean over "ill-advised" mergers
and "unsuccessful" development strategies. Over the past five
years, its shares dramatically underperformed rivals Ensco Plc
and Noble Corp - even before the 2010 Gulf of
Mexico oil spill following a deadly Transocean rig accident.
Transocean grew out of a series of mergers that started with
the purchase by Alabama-based Sonat Offshore Drilling of
Norway's Transocean ASA in 1996. Three years later came the
takeover of Sedco Forex, spun off by oil services giant
Schlumberger, before a blockbuster deal with
GlobalSantaFe in 2007 created the current industry leader.
Icahn wants the company to replace three directors,
including the chairman, with his nominees John Lipinski, José
Maria Alapont and Samuel Merksamer.
Transocean has responded by questioning their
qualifications, saying Alapont and Merksamer have no apparent
energy experience while Lipinski leads a U.S. refiner - a side
of the oil business far removed from exploration.
Transocean also notes that Icahn, in his successful battle
to take over the board of refiner CVR Energy Inc last
year, had criticized Lipinski's track record, and that
shareholder advisory firm ISS did not back him for Transocean's
board - even though it approves of Merksamer and Alapont.
Apart from Talbert, the two directors in Icahn's sights are
Thomas Cason and Robert Sprague. Cason had been a GlobalSantaFe
director, and previously worked at oilfield services company
Baker Hughes Inc. Sprague has been a director since 2004
after a long career at Royal Dutch Shell Plc.
Icahn has said he holds the directors responsible for the
value destruction brought about by the takeovers of old assets
while rival Seadrill was investing in new rigs.
"We believe that directors Talbert, Sprague and Cason have
proven themselves incapable of delivering returns, and
therefore, they should be replaced," Icahn wrote on Monday.
Transocean is in the process of shaping up its sprawling
global operations. It has promised to cut $300 million of costs
by next year, on top of planned reductions of about the same
this year from the 2012 operating and maintenance cost figure of
Shares of Transocean were down more than 1 percent at $53.94
on Monday. The stock has declined by 65 percent in the past five
years, compared with a 33 percent drop for Noble and an 8
percent slide for Ensco. Seadrill is up 38 percent in that time.