LONDON – Oil exploration firm Gulf Keystone said its board would recommend that shareholders vote against four proposed directors backed by M&G Recovery Fund, an activist shareholder which has criticized governance and "excessive" executive pay at the firm.
Gulf Keystone said on Saturday senior board members had met M&G representatives on Friday and interviewed three out of the four nominees during the week, and had concluded that the candidates did not have the right experience.
"Following the meeting, the board unanimously recommends shareholders to vote against all of the proposed M&G candidates," Gulf Keystone said in a statement, adding that it was posting a circular to shareholders to explain its reasons.
M&G, which owns 5.1 percent of Gulf Keystone, could not immediately be reached for comment.
Shareholders will have the chance to vote on the proposed new directors at the annual meeting on July 25. They will also vote on the re-appointment to the board of two existing directors, whom M&G has said it will be voting against.
On July 7, M&G said Gulf Keystone still needed to do more to strengthen its board, days after the firm had hired former Glencore chairman Simon Murray as its new chairman.
The hiring of Murray was seen by analysts as an effort to calm investor concerns over corporate governance ahead of a planned move by Gulf Keystone to London's main market from its junior exchange.
M&G had called in June for four new directors to join the board of Gulf Keystone, whose prize asset is an oil field in the Kurdistan region of northern Iraq.
Gulf Keystone said M&G candidates Philip Dimmock, John Bell, Thomas Shull and Jeremy Asher did not have "the consistent track record of successful operational and commercial experience, in any sector, that is required for a FTSE 250-sized company".
Gulf Keystone also said the four men lacked oil and gas expertise and experience in fostering successful relationships with local partners that are critical to winning and progressing business in an environment like Kurdistan.
The firm has been beset by difficulties including Kurdistan's long-running dispute with the central government of Iraq over payments for oil, and a legal challenge to the firm's ownership of its oilfields.
The statement singled out Asher for criticism, saying that it would not be appropriate to reappoint him to the board after he was removed in March 2010, and that as a shareholder with a 1.71 percent stake he would not be independent.
The statement described Asher, who was formerly the deputy chairman, as having been "a disruptive presence on the board". He could not immediately be reached for comment.
Gulf Keystone said the Board was confident of attracting candidates of a high caliber instead of the M&G candidates, adding that first interviews with three outstanding candidates had taken place during the week.
(Reporting by Estelle Shirbon; Editing by Mark Trevelyan)