AGMs

11 questions asked at 2022 Santos AGM


May 3, 2022

Below is the text of 11 questions asked at the 2022 Santos AGM held on May 3, along with the 4 which weren't read out. The meeting lasted 3 and half hours.

1. Did any of the 5 main proxy advisers - ACSI, Ownership Matters, Glass Lewis, ISS and ASA - recommend a vote against the board's recommendation on any of today's resolutions? Has there been a material proxy protest vote against the board's recommendations on any of today's resolutions, including the 3 contingent shareholder resolutions? Will you disclose the proxy votes before the debate on today's resolutions so shareholders can ask questions about the reasons if there have been any protest votes?

Answer: yes, only 1 of the 5 recommended against and chair Keith Spence said he'd have more to say on that later.

2. What is the Santos policy position on making political donations and will we be making any related to the current Federal election, including subscription payments or attendance at conferences and fundraising events? What do we think of the Rio Tinto and BHP policies of strictly banning all political donations, in contrast to Woodside Energy which has been a major donor to both sides of politics for many years?

Answer: we take out subscriptions to the ALP and Liberal Parties which give us important accession to decision-makers.

4. Question on Item 2b. Could candidate Peter Hearl please outline his personal approach to ESG, particularly the social bit given that he is chair of Endeavour Group, the world's largest multi-venue poker machine operator which drains an estimated $1.5 billion a year from Australian gamblers on their 12,000-plus machines at more than 300 venues. Also, can Peter please explain why Endeavour Group continues to understate its pokies revenue, unlike rival pokies giant Crown Resorts and Star Entertainment. Does he believe in transparency, even when operating in so-called “sin” industries.

Answer: Inappropriate to discuss Endeavour at Santos and Peter is a fine upstanding fellow.

5. Would Peter Hearl agree with the assessment that a majority of the Santos directors, including himself, adopt an old school “tell em nothing” approach to external stakeholders and so-called activists. As a director, was he made aware of the various written transparency requests I made 3 weeks before today's AGM and was he involved in the decision to seemingly reject all of those requests, demonstrating an old school bunker mentality to stakeholder engagement and transparency. What is his view about displaying the proxy position before the debate and whether Santos should publish a full transcript of today's AGM, like his sponsor at Endeavour Group, Woolworths, has done for the past 2 years?

6. Item 2b - re-election of Eileen Doyle. When disclosing the outcome of voting on all resolutions today, will Dr Doyle advocate internally for Santos to advise the ASX how many shareholders voted for and against each item, similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions and was a disclosure initiative adopted by the likes of Metcash, Altium and Dexus after their 2021 AGMs and G8 Education and GQG Partners as recently as last week. Does the chair have a view on this request which was first made in writing 3 weeks ago?

Poor treatment of retail shareholders

7. Could Dr Eileen Doyle outline her approach to fair treatment of retail shareholders in capital raisings. For instance, when she was serving on the Oil Search board in 2020, why did she agree to a heavily discounted $760 million institutional placement at $2.10, a 23% discount to the previous close, whilst limiting retail shareholders to the accompanying 1-for-8 $400 million pro-rata offer which was non-renounceable. Retail shareholders owned about 20% of Oil Search going into this offer, but then only contributed 6.9% or $80 million of the $1.16 billion raising. Will Dr Doyle support Santos launching a discounted $30,000 retail-only Share Purchase Plan as a make-good for this appalling past treatment of retail shareholders.

8. Item 2d- election of Michael Utsler. Whilst the candidate is clearly a hydro-carbons lifer, is it appropriate for Michael Utsler to serve on the Santos board when he is the full time Executive chairman of rival listed energy company Otto Energy, which has a share price currently valued at just 1c, giving it a market capitalisation of $67 million. Shouldn't the Santos board be populated by professional directors with who can given Santos 1-2 days a week, not full-time CEOs of tiddler Perth-based wannabe resources companies. Is it appropriate for Michael Utsler to serve on the Santos board when he is the full time CEO of rival listed energy company Otto Energy, which has a share price currently valued at just 1c, giving it a market capitalisation of $67 million. Shouldn't the Santos board be populated by professional directors with who can given Santos 1-2 days a week, not full-time CEOs of tiddler Perth-based wannabe resources companies.

Why no Adelaide non-executive directors

9. Santos is a famously Adelaide based company, but Michael Utsler is based in Perth. How many of our directors actually live in Adelaide and has Michael visited the Santos head office in Adelaide as yet? Have any physical board meetings been held in Adelaide yet? Will we appoint an Adelaide-based director before next year's AGM in Adelaide?

Answer: we have one Adelaide-based director in the CEO but believe in diversity and have directors all over the place.

10. Item 2(c): election of Musje Werror. Congratulations to Musje on being appointed to the Santos board. Could the chair comment on the process by which the 3 successful Oil Search directors were promoted to our board. Were the unsuccessful candidates disappointed and could Musje comment on whether the Oil Search board made the decision or whether that was up to Santos directors. Under the merger terms, are we obliged to have a PNG-based director on the Santos board.

Answer: Yes, the unsuccessful candidates were disappointed but we ran a proper process and also felt we needed a PNG-based director given a large proportion of our assets are based there.

11. Director fee pool: Now that Santos is a $27 billion company thanks to the Oil Search merger and Putin's invasion of Ukraine, if this fee cap increase from $2.6 million to $3.5 million is approved today, what is the actual plan in terms of increasing the fees paid to individual directors? Was the current fee cap of $2.6 million one of the reasons that Michael Utsler is only joining the board today, unlike the two other Oil Search directors who have been receiving fees since joining the board on December 17 last year. If this wasn't the reason, why didn't Michael join the board last December?

Answer: Michael didn't join due to the cap of 10 directors on the board, so we had to wait for an AGM retirement. However, he has been paid and attending as a shadow director since last December.

4 Questions lodged but not asked:

Item 6. LTI grant for CEO Kevin Gallagher: It was very disappointing that we only discovered there was a 37% vote against our first ever climate change report after the debate had concluded. Has there been a material protest vote on this item, because of another ISS recommendation? Does the chair recognise that the big index funds - Blackrock, Vanguard and State Street - tend to follow ISS recommendations. How much do these 3 giants own of Santos and did we try to swing their proposed opposition on remuneration matters today?


Item 7: Director Fee Pool: Chair, that ridiculous public attack you launched against proxy adviser ISS just confirms the combative Santos culture when it comes to engaging with critics. As our independent chair, are you just doing the bidding of our well paid CEO? Are you seriously saying that proxy advisers should be forced to provide you with a draft copy of their reports, as was proposed in the regulations voted down in the Senate earlier this year. Shouldn't proxy advisers be allowed to privately contract with institutions without the dead hand of government reaching in and forcing disclosure of their IP to third parties who don't even pay for the service. What next? Journalists being forced to show politicians drafts of their newspaper articles before they are published. Please stop blaming the independent proxy advisers and instead listen to your shareholders who today delivered the first strike. Did they also protest on this board fee cap resolution?


Question for resolution 7: Given the interesting discussions across a range of topics today, including this proposed fee cap increase for the board, could the chair undertake to make a full transcript of proceedings available on the company's website, along with an archive of the webcast? Will you commit to publishing a transcript from today, plus a back catalogue of AGM transcripts so investors can access a full history of debate at the most important governance meeting of the year. The likes of Nine, AGL, ASX, ANZ, CIMIC, Domino's, G8 Education and Lend Lease all produced their 1st AGM transcripts in 2021. Will you follow suit today?



Item 8. Resolutions requisitioned: It was very disappointing that we only discovered there was a 37% vote against our first ever climate change report after the debate had concluded. The same applies to the 25% vote against the CEO's LTI grant. Please disclose the proxy position on this item and the contingent items now so that we can discuss any concerns raised by shareholders. Bob Ritchie from the ASA will hopefully get up and confirm that ASA policy is for proxy disclosure before the debate on each time. Please comply with ASA policy.