April 22 (Reuters) – Proxy advisor ISS on Wednesday recommended that ConocoPhillips shareholders vote in favor of a proposal calling for an independent board chair, citing the need for stronger oversight of management.
The non-binding proposal asks the U.S. oil and gas producer to separate the roles of chair and chief executive officer, with an independent director holding the board chair position.
ISS backed the proposal, arguing that shareholders would benefit from “the most robust form of independent oversight of management in the form of an independent board chair”.
It cited concerns over the current lead director role, which is chosen by non-employee directors and not independent directors.
ISS said the existing governance structure could make it more difficult for investors to provide candid feedback to the independent directors regarding the CEO’s performance, succession planning, or other sensitive matters.
“The board is responsible for overseeing management and instilling accountability, and conflicts of interest may arise when one person holds both the chairman and CEO positions,” ISS said.
Currently, Ryan Lance serves as the chairman and chief executive officer.
The proxy advisor also raised concerns over CononoPhillips’ underperformance, noting that its total shareholder returns have lagged the S&P 500 over the last three years.
A ConocoPhillips spokesperson referred to the company’s proxy filing, which said the board determined that continuing with a combined role of chairman and CEO along with an independent lead director was in shareholders’ best interests.
Last month, the shale producer’s board had recommended that shareholders vote against the proposal for an independent board chairman.
ConocoPhillips’ governance structure is similar to that of peers Exxon Mobil and Chevron, where the top bosses also serve as chairmen on their respective boards. London-listed peer BP, however, has separate CEO and chairman positions.
(Reporting by Dharna Bafna and Sumit Saha in Bengaluru; additional reporting by Sheila Dang in Houston; Editing by Devika Syamnath)
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