An influential investor advisory firm has called on shareholders in Providence Resources to reject the re-election of a long-standing director at its annual general meeting next week. The exploration company completed a $70 million rescue fundraising this month.
Institutional Shareholder Services (ISS), a company which advises large investors on corporate governance, has recommended that shareholders vote against a proposal to re-elect Philip Nolan, a former Eircom chief executive, as a non-executive director (NED) of the board.
Mr Nolan, on the board for the past 12 years, is deemed by ISS not to be an independent director as his tenure exceeds nine years and he has served for more than a decade alongside the chief executive, Tony O'Reilly Jnr.
“A vote against the re-election of Philip Nolan is warranted because . . . he is a non-independent NED and is currently a member of the audit and remuneration committees and the composition of these committees does not adhere to UK best practice recommendations for a company of this size,” ISS said in a report.
While ISS recommends that company boards should have at least two independent non-executive directors, excluding the chairman, no-one on the board can be classified as independent, it said.
ISS recommends that investors abstain from the re-election of James McCarthy, on the board for 11 years and chairman for the past year, as a non-independent chairman and also currently a member of the audit and remuneration committees.
“A vote against this resolution is warranted for those shareholders in markets who have a fiduciary responsibility to vote either in favour or against and do not recognise an abstention as a valid option,” ISS said.
A spokeswoman for the company declined to comment.
Meanwhile, ISS has advised shareholders to reject a resolution giving Providence permission to issue shares lasting up to five years. It said the proposed amount exceeds the proxy firm’s recommended limit of 33 per cent of issued share capital and exceeds an 18-month timeframe that it deems acceptable.
However, voters at Providence’s extraordinary general meeting on July actually approved this motion.
Providence has disclosed in recent days that a number of leading international investment houses, including M&G Investment, Capital Group companies and Henderson Global, had backed its $70 million equity raise.
It has used some of the proceeds from the share sale to pay off $20 million of loans from US lender Melody Capital, with the balance covered by almost 10 million shares.
Further funds were used to meet $4.77 million of payments arising from the company's court battle with Transocean, an offshore drilling company which provided services for Providence's key Barryroe exploration site.