Media release

Leadership hits the wall: ACCR files members’ statement against re-election of Santos’ Chair

Santos Ltd shareholder the Australasian Centre for Corporate Responsibility​ (ACCR) has filed a members’ statement against the re-election of company Chair, Keith Spence, at the company’s upcoming annual general meeting.

The members’ statement says a vote against Spence is warranted because under his direction the Santos board has failed to deliver a company strategy that maximises shareholder value.

  • According to ACCR analysis, Santos’ pivot to a growth strategy in early 2021 has increased capex by 150%, but only delivered 7% total shareholder returns (TSR). The average TSR for global and Australian oil and gas peers over the same period was 82%.
  • Santos’ is a laggard in returning capital to shareholders. With a 5.8% 2023 dividend and share buyback yield, it is the lowest amongst its peer group.
  • Santos has implemented an A$6m CEO bonus that incentivises growth regardless of shareholder returns.

As Chair since February 2018, Spence is ultimately responsible for the company's poor performance and strategic failings.

Brynn O’Brien, Executive Director at the Australasian Centre for Corporate Responsibility (ACCR) said:

“From early 2021, with Chair Keith Spence at the helm, Santos has made a series of strategic decisions aimed at growth which have resulted in chronic share price underperformance, delivering woeful returns compared with industry peers.

“And as few shareholders will forget, in 2021 Spence’s board waved through a $A6m bonus for CEO Kevin Gallagher to incentivise growth - despite clear warnings that there was no linkage between this cash splash for the CEO and shareholder value. Investors are now paying for this mistake.

“As Chair, Spence is ultimately responsible for the company's poor performance and strategic failings.

“These strategic missteps cast doubt upon the judgement of Spence’s board and suggest he has hit the wall in terms of his capacity to deliver value for shareholders.

“Shareholder frustration is mounting, with investors seeking to take things into their own hands by proposing alternative strategies in lieu of the board producing a compelling vision.

“It is notable that Santos’ wallowing share price only jumped for a brief moment following the Federal Court ruling in January, which cleared the way for the Barossa project construction to restart. This demonstrates that Santos’ troubles are more fundamental than one delayed project.

“The timing of this vote could not be more critical. While the much hyped merger with Woodside is dead, Santos is clearly still on the market, and shareholders need confidence they have a chair with the requisite skill and judgement to properly identify and weigh all available strategic options before them.

“In the context of sustained underperformance, it’s quite appropriate for the Chair-CEO relationship to receive scrutiny. Keith Spence and Kevin Gallagher have a long-standing business relationship spanning decades across a range of companies, and we question whether there is sufficient independence for Spence to exercise an appropriate level of control over management.

“Given the challenging future operating environment for fossil fuels, investors in carbon-intensive companies quite rightly expect that boards have directors with the requisite energy and expertise to serve long term shareholder interests in the energy transition.”


Chart 1: Total Shareholder Return (TSR) of Santos and selected global and Australian O&G peers (30 March 2021* to 31 December 2023)

  • 30 March 2021, date of Barossa FID
    Data used with permission of Bloomberg Finance L.P.

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