Proxy advisory firm ISS on Wednesday recommended that ConocoPhillips shareholders vote in favor of a non-binding proposal that would install an independent board chair and separate that position from the chief executive officer role. ISS framed its recommendation around the need for more robust oversight of management.
In its guidance, ISS argued that shareholder interests are best served when an independent director presides as board chair, calling such an arrangement "the most robust form of independent oversight of management in the form of an independent board chair." The proxy adviser expressed particular concern about ConocoPhillips’ current lead director framework, noting that the lead director is selected by non-employee directors rather than by independent directors.
ISS warned that the company's present governance structure could impede investors’ ability to provide candid feedback to independent directors on sensitive matters such as the CEO’s performance and succession planning. "The board is responsible for overseeing management and instilling accountability, and conflicts of interest may arise when one person holds both the chairman and CEO positions," ISS said.
Ryan Lance currently holds both the chairman and chief executive officer roles at ConocoPhillips. ISS also pointed to the company’s recent market performance, saying that ConocoPhillips’ total shareholder returns have trailed the S&P 500 over the past three years.
A ConocoPhillips spokesperson directed inquiries to the company’s proxy filing, which states that the board has concluded a combined chairman and CEO, supplemented by an independent lead director, is in shareholders’ best interests. Last month the company’s board formally recommended that shareholders vote against the proposal for an independent board chair.
The governance arrangement at ConocoPhillips aligns with the structure at several U.S.-listed peers where the chief executive also serves as board chairman. The proxy advisory note contrasted that approach with other companies that maintain separate CEO and chair roles.
Contextual takeaway - ISS is urging investors to support a change in governance at ConocoPhillips based on oversight considerations and recent relative performance, while the company’s board continues to back the current combined leadership model paired with an independent lead director.