Yedlin: Proxy battle at Crescent Point fizzles


Annual meetings are generally dull and prescribed affairs, but that description didn’t necessarily apply to Crescent Point Energy.

The company’s AGM took place Friday against the backdrop of a proxy battle launched by Cation Capital, which was seeking to nominate four directors to Crescent Point’s board.

Between comments made by Cation’s founder, Sandy Edmonstone, and the letter published by Crescent Point urging its shareholders not to vote for the new nominees, the rhetoric had become rather heated.

In addition to Edmonstone, who was previously an investment banker with Macquarie Capital Markets, Tom Budd, a key deal maker at the investment firm of GMP Securities (now GMP FirstEnergy) until 2008, Herbert Pinder and Dallas Howe were the other names put forward.

Both Howe and Pinder are from Saskatchewan; Pinder serves as a director of ARC Resources, while Howe was most recently the chairman of Potash Corp.

Crescent Point was clearly not going to leave anything to chance in terms of ensuring it had the votes needed to elected its slate of directors, as its proxy solicitation firm Kingsdale Shareholder Services was busy calling individual shareholders at home in the days leading up to the voting deadline Wednesday.

The level of interest in the meeting’s outcome was high, evidenced by the lineup to register for the meeting starting at the escalators on the second floor of the Hyatt Hotel, and running the length of the hallway.

That’s a rare event.

Also rare is media not being allowed into the annual meeting, which was the case Friday.

Not only was the media not allowed into the room, the three members of the media who were present were restricted from passing past the registration table until long after the meeting had concluded, with an individual stationed in front of the table to make sure no one passed by.

Other companies that have faced similar proxy fights involving activist shareholders, such as Agrium, have not closed the door to the media. One would think when there are contentious events such as what took place Friday, it’s important to get the full picture, rather than the one that is related second hand.

Speaking after the meeting, Crescent Point CEO Scott Saxberg said the decision was made because of the “character of the meeting” and the event.

“We wanted it to be a super clean meeting and be done, versus creating a scene,” he said.

When the dust settled, the Crescent Point directors presented as a slate were re-elected by a wide margin of 98.67 per cent of shareholders, amounting to 267.7 million shares voted in their favour. In addition, there were votes cast for the individual nominees, with the total number of shares in favour of the Cation nominees being 277.2 million.

Budd, speaking briefly to reporters following the meeting, said even though Cation was not successful in its quest, he felt a strong message had been sent to Crescent Point management and its board of directors, but he didn’t shy away from criticizing the directors for what he characterized as their small stake in the company.

“Those board members who know the company more than me, where have they been?” said Budd, adding his group of four own more of the outstanding shares than the non-employee directors, combined.

The information circular showed that non-employee director number to be 703,143, with 80 per cent of that in the hands of the company’s board chair, Peter Bannister.

When asked about that issue, Saxberg said many of the directors were new to the board and that it was unreasonable to expect they would have a big share ownership position.

“That message is loud and clear and … and they are just new,” said Saxberg, adding he expected the ownership stakes would increase over time.

While the slate was voted in, one of the resolutions before the shareholders — the “say on pay” — was soundly rejected, gaining only 38.5 per cent votes in favour.

One of the points raised by Cation was that the executive team at Crescent Point had seen increases in compensation year over year, even as the share price had dropped.

Saxberg said he was listening to their criticism.

“We met with them, we are an open company. We take feedback. We take criticism. We discuss it. We are more open to have conversations with all of our shareholders and we continue to do so. And we encourage that. We’d like that feedback,” said Saxberg.

Interestingly, Saxberg interpreted the vote on the “say on pay” as a reflection of the company’s share price, rather than on the management team and its compensation.

It’s tough to buy that argument.

The S&P/TSX Capped Energy Index has risen 2.25 per cent in the last 12 months, while Crescent Point has dropped 21.69 per cent.

Its shares closed at $10.18 on Friday and in a note sent to investors, Peters & Co. said “….the company’s production growth and balance sheet rank below other light oil weighted peers. Success in the Uinta and its new Duvernay position along with more clarity on asset sales and the spend profile are needed to regain confidence in the longer-term growth potential.”

The market is sending Crescent Point a message. Despite successfully fending off the dissident slate, the company is in the penalty box and in a position where it has to work hard to regain the confidence of investors. If nothing changes between now and its annual meeting 12 months hence, the narrative could be very different for both management and the board of directors.


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