InterOil's board is reducing the number of directors from 10 to eight at the meeting, recognising that fewer directors are needed for its streamlined business, but Mulacek's dissidents who claim to hold about 7.6% of InterOil's common shares want further cuts and a sweeping range of reforms that would make it more difficult to change control of InterOil.
InterOil told shareholders that Mulacek was trying to hinder the progress that had been made since he departed InterOil, and that his proposals would restrict the business judgment of the board due to their overly prescriptive and restrictive nature and be a disadvantage when trying to attract talent.
"Until 2013, under Mr` Mulacek's leadership, InterOil had no clear strategy and suffered multiple failed attempts to enter strategic partnerships to monetize and develop the Elk-Antelope fields. As a result, InterOil was a highly volatile stock with substantial short positions that traded on hype and speculation," InterOil said in a letter to shareholders.
Over the past three years the board had been revamped with a substantially new board and a completely refreshed executive team under CEO Dr Michael Hession.
The board said it had been able to bring Total and Oil Search to the Elk-Antelope project, moved the Papua LNG project forward, overseen the divestment of its non-core refining and distribution business in PNG and had successfully made the Triceratops, Bobcat and Raptor discoveries.
It said the existing board had the right skills, capabilities and industry expertise to soundly steward InterOil and to enhance value for all shareholders, whereas Mulacek appeared to be pursuing a self-serving agenda to take back control of InterOil for his benefit, InterOil's board said in a letter to shareholders.
Unlike the Mulacek era, which unsuccessfully pursued an unusual mix of onshore and offshore LNG projects, chairman Chris Finlayson and Dr Hession said InterOil had moved the Papua LNG project forward and expected that on a final investment decision it would be one of the lowest cost and most competitive new-build LNG projects in the world
In contrast, the company says Mulacek wants to reduce the board to six, on which he may seek to nominate and control.
"The Mulacek agenda would be a step in the wrong direction," the company said.
Mulacek is seeking to limit overall compensation for all directors to $600,000 annually to "better align the interests of the directors with the interests of the shareholders".
He has also proposed the company should also require at least 50% of directors' total compensation be equity-based, and escrowed for the time they are directors of the company, plus an additional 12 months.
Among Mulacek's other demands, anticipating an offer from a suitor, is a rule prohibiting executive officers from receiving payment in connection with a change-in-control transaction unless the bid is above $C60 per share, around double where the company is trading now.
His proposed rule would also require that the company is trading well above the share price when the executive started their employment before they secure any bonuses.
A poison pill would also require shareholders get a vote on significant acquisitions and dispositions, defined as any asset with a market value greater than 10% of the book value of the company.
InterOil's major asset is an interest in the Elk-Antelope fields, the backbone of the proposed Papua LNG project, and the undeveloped fields.
Elk-Antelope has around 7.1 trillion cubic feet plus liquids (1C), enough to support a two train development, plus a further 6Tcf in other discoveries.
