May 13 (Bloomberg) -- Transocean Ltd., the largest offshore oil rig contractor, said Chairman Michael Talbert will step down as the company tries to fend off billionaire investor Carl Icahn’s board nominees.
Talbert will give up his position as chairman by November and leave the board by the 2014 shareholder meeting if he’s re-elected to his seat on May 17, Vernier, Switzerland-based Transocean said today in a statement. Talbert, 66, has been on the Transocean board since 1994 and was chief executive officer until 2002.
“After consultations with our shareholders, I have decided to retire from the board on a timetable that will allow the board to carefully select a new chairman who will help guide the company in the creation of sustainable, superior value for all shareholders,” Talbert said in the statement. Transocean will announce an independent chairman no later than the board’s November meeting.
Icahn, who holds a 5.6 percent stake in Transocean, called on the company in January to issue a $4-a-share dividend and is seeking to replace three of the 14 board members, including Talbert. Transocean proposed a $2.24 dividend in March after not issuing one last year as it sought to maintain an investment grade credit rating and a “strong, flexible balance sheet” while reducing the value of its businesses.
The company is asking shareholders to vote for all five of the board members up for re-election this year and reject Icahn’s proposed dividend.
Icahn called the announcement of Talbert’s departure a “last ditch effort to preserve his re-election,” in a letter to shareholders today.
“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.
Keeping Talbert as chairman for six months will give Transocean time to consider candidates among existing directors and anyone else outside the board, Martin McNamara, chairman of the board’s governance committee, said in a phone interview today.
The search process, which McNamara will probably lead if he remains head of the governance committee after the May 17 annual meeting, would use a search firm, he said.
Guy Cantwell, a Transocean spokesman, declined to give the exact date of the November board meeting.
Transocean and “Talbert are trying to show shareholders that the company will be taking a new direction with the board/chairman, but it will be on their terms, not Icahn’s,” Luke Lemoine, an analyst at Capital One Southcoast Inc. in New Orleans, said in an e-mail.
Glass Lewis & Co., a proxy adviser, recommended against Talbert’s re-election because he led the board during a period of underperformance, according to an April 30 note to investors. Institutional Shareholder Services also recommended shareholders vote against Talbert.
Icahn’s slate, if elected, could “constitute a distraction of management from the very substantial progress we’re making,” said McNamara, who will mark his 20th year on the board next year when his term is up for re-election.
“It would have been better if this discussion, if you will, had proceeded differently and begun sooner,” he said. “I’m not sure a proxy contest is the best form of communication.”
Existing board members will be as open and cooperative as possible if Icahn’s nominees win shareholder approval, McNamara said.
Transocean, which has 26 buy, 16 hold and two sell ratings from analysts, fell 0.3 percent to $54.50 at the close in New York. The shares have gained 22 percent this year.
Transocean owned the $365 million Deepwater Horizon rig that was destroyed in the BP Plc oil spill in the Gulf of Mexico. The company employed nine of the 11 workers who died in the April 2010 disaster.