CAIRN Energy, one of the most high-profile victims of last year's shareholder spring of discontent over executive pay, appears to have returned to shareholder favour.
The oil and gas firm's directors' pay policies won backing from 99.5% of votes cast at yesterday's general meeting, during which chief executive Simon Thomson said the rebalancing of Cairn's portfolio is complete.
The overwhelming endorsement for the company's executive pay policies provided a dramatic contrast to events at last year's meeting, when Cairn suffered a humiliating 67% vote against its directors' remuneration report.
Cairn scrapped a proposed one-off share option award worth £2.5m for its chairman Sir Bill Gammell in January last year.
Following the reverse, Cairn launched a charm offensive, under which Sir Bill and non-executive director Jackie Shepard led a dialogue with shareholders about corporate governance and remuneration issues.
In its annual report published last month, Cairn said its remuneration committee undertook a comprehensive review of pay policy for senior personnel in 2012.
The boardroom pay bill fell to £3.2m in 2012 from £7.3m in 2011, when Sir Bill and two former directors received compensation for loss of office totalling £3.6m.
After the AGM, Mr Thomson said: "We listened, we acted and I think we moved on. The results today showed overwhelming support."
Some 99.9% of votes cast at the meeting were in favour of adopting the annual report and accounts for 2012, suggesting investors are happy with the strategy being pursued under Mr Thomson.
After succeeding Sir Bill in July 2011, Mr Thomson focused on building a rebalanced portfolio for Cairn, which achieved huge exploration success in India.
The strategy combines exploration in frontier areas such as Greenland with lower risk activity in the North Sea.
Cairn has built a big position in the North Sea through the acqusitions of Agora Oil and Gas and Nautical Petroleum for around $1 billion in total last year.
The company has added exploration acreage in under-explored areas off Ireland, Morocco and Senegal through acquisitions and by farming into others' acreage.
Mr Thomson told the meeting: "Twelve months ago we had just started the rebalancing. It's very pleasing for me to be able to stand in front of you and say we've delivered that."
He said Cairn could deliver "substantial value" through activities planned for the next 18 months.
Cairn and partners expect to be able to submit plans to develop the giant Catcher and Kraken finds in the North Sea for government approval this year.
Cairn is preparing to drill off Morocco, to start a multi-well campaign on acreage it believes could contain billions of barrels oil equivalent.
It will decide later this year whether to drill another well off Greenland in 2014.
"We now have operational control of a number of new frontier areas and that's where Cairn Energy in the past has always succeeded," said Sir Bill after the meeting.
Cairn sold a controlling stake in its former subsidiary in India to Vedanta Resources for $5.4bn in 2011.
The company distributed $3.5bn to shareholders, but retained plenty of cash. It has a 10% stake in Cairn India.
While exploration firms seem to be out of favour with stock market investors, Mr Thomson said companies with clear strategies, robust balance sheets and strong shareholder support are well placed.
There has been speculation Vedanta Resources might bid for Cairn Energy. The Indian company's chairman, Anil Agarwal, said yesterday that selective mergers and acquisitions would form part of its strategy, but added: "We are now focused on de-leveraging and reducing debt."
Analysts at Jefferies International told clients: "We continue to believe Cairn management has done an admirable job in repositioning the company and has left itself with a strong balance sheet to support its investments."
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