Public

Woodside Petroleum (WPL) 2017 AGM Voting Intentions

Company/ASX Code : Woodside Petroleum Limited (WPL)
Registry : Computershare Services
Poll/Show of Hands : Poll
Webcast : No
Venue :
10am Perth Exhibition and Convention Centre Perth, Western Australia
Monitor : Mr Barry Nunn
AGM Details / NoM : Friday 5th May, 2017

A profitable year and improved remuneration reporting

This company is monitored by Barry Nunn and Tony McAuliffe. The company monitors had a pre-AGM meeting with the Chairman Michael Chaney AO and non-executive director Melinda Cilento.

ASA Position
Not Applicable
Item 1: Consideration of accounts and reports

WPL reported a profitable year in a market influenced by downward pressure on energy prices and a requirement to optimising production facilities, sustain access to gas supplies and secure adequate reserves.

Results are presented in a new form in an Annual report that is eminently readable and provides information in a form suitable both for the occasional reader and the professional analyst.

The substantial impairment costs of 2015, consequent on lowered forward oil pricing estimates, were not repeated in 2016. Thus earnings per share recovered, but only to 35% of the level achieved in 2014.  Production was increased because of the greater annual production generated by higher availability and good efficiency of production facilities.

Safety performance improved in the year to a level that places the operation in the top 25% in comparison with international oil and gas producers

TSR recovered from the low of 2015 and dividend policy was maintained at 80% of EPS, yielding a fully franked dividend of 83 US cents.

Exploration successes contributed to hydrocarbon reserves as did the acquisition of the BHP share of the Scarborough gas field offshore WA.

Chairman Michael Chaney announced his intention to retire during 2017, to be succeeded by Richard Goyder.  This has now been deferred to the AGM in 2018, with Mr Goyder joining the WPL Board in August 2017.  Independent director Andrew Jamieson retried on 21 April 2016, thus the Board now has 9 independent directors, with 33% women.

A continuing ‘freeze’ on fixed remuneration levels for the coming year has been announced, together with significant changes to remuneration policy.  Further changes are to be considered in the coming year.

WPL continue to make political donations contrary to ASA guidelines. These are justified by Woodside on the basis of fees and charges required to attend briefings with legislators.

Summary


ASA Position
For
Item 2(a): Re-election of Mr Michael Chaney AO as a Director

Mr Chaney has been a director of WPL since 2005, thus he will enter his 13th year as a NED during 2017.  Mr Chaney will exceed ASA’s guideline for director independence of 12 years.  In view of his significant and ongoing contribution to WPL success and his announced retirement, we are pleased to support his re-election.


ASA Position
For
Item 2(b): Election of Mr Larry Archibald as a Director

Mr Archibald was appointed to the Board in February 2017.  He brings to the Board significant experience in the international oil and gas industry.  We support his election. 


ASA Position
For
Item 2(c): Election of Mr Ian MacFarlane as a Director

Mr MacFarlane was appointed to the Board in November 2016.  His expertise and experience as a senior Federal Minister with a portfolio including Resources, Energy and Industry equip him well to contribute to the Board.  We support his election.


ASA Position
For
Item 3: Adoption of Remuneration Report

The Remuneration Report features greater clarity of explanation of the reward system than in previous years. No long term incentive awards vested in 2016.

Considerable changes have been made to remuneration arrangements following the ‘first strike’ at the 2016 AGM.  These include:

- Reduction of cash component of CEO’s short term incentive award.

- NPAT replacing RTSR as score card component for short term incentive awards

- Replacing ‘fair value’ with ‘face value’ in valuing share awards

- Elimination of retesting of long term incentives

- Continuation of the freeze on fixed remuneration for CEO, KMP and NEDs for FY16

- Share investment requirements for NEDs increased

ASA requires at least two tests for long term awards.  WPL continues RTSR as the single test, with further review of this and other aspects of remuneration. The WPL vesting schedule remains over-generous, with average comparative performance attracting 50% of the allocated incentive.

Other changes to remuneration include provisions to recover deferred payments in the event of a breach of conduct and a rebalancing of the cash to shares ratio for short term incentive payments.

Despite requests over the last two years, a table of actual take-home pay for KMP has not been included in the Remuneration Report.

The significant changes made to remuneration arrangements, coupled with the announced further remuneration review in 2017, are sufficient to warrant support for the Remuneration Report.  This support will be maintained only if further change is effected in 2018.


ASA Position
Undecided
Item 4: Spill motion (contingent resolution)

Given WPL undertakings to continue the review of remuneration arrangements, we do not support a spill motion.  However should the undertaking for such a review be withdrawn during the meeting ASA may vote in favour of this resolution.



The individuals involved in the preparation of this voting intention have a shareholding in this company. 


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