Woodside Petroleum is likely to come under pressure to review its investor relations strategy if, as expected, shareholders today torpedo a $US2.7 billion ($2.9 billion) selective buyback of Royal Dutch Shell's holding that just six weeks ago was billed as a "compelling offer" for stakeholders.
Barring a stunning reversal of shareholder attitudes, Woodside will fail to receive the support of 75 per cent of voting investors, consigning the buyback to the dustbin and in the process serving as a slap in the face to management for failing to successfully sell the rationale of the deal.
An alternative plan for Shell's 13.6 per cent stake remains unclear. Woodside chief executive Peter Coleman has said "it would take some time for us to reconsider what we would do".
Shell chief executive Ben van Beurden last night told his investors he was taking "firm actions . . . by selling selected assets" to add to the $US8 billion in disposals this year, suggesting he may dump the entire Woodside stake in the near term.
Woodside would not comment beyond a brief statement it issued yesterday morning declaring the audited flow of proxy votes received ahead of today's 10am shareholder meeting in Perth. About 59 per cent of Woodside's share capital has been voted, of which 71.3 per cent was in favour of the Shell buyback resolution.
However, 28.7 per cent of the votes cast went against the resolution and - as Shell's 13.6 per cent interest is ineligible for voting - Woodside will require a big turnout of supportive shareholders today combined with the in-person reversal of some of the proxy votes to save the buyback.
Analysts and market watchers have described the voter backlash as surprising and embarrassing for a company of Woodside's size. It is likely to spark questions about whether it was too blasé in discussing the buyback's merits with investors.
However, the opposition to the selective buyback, particularly from proxy advisers unhappy about Shell's preferential treatment and access to Woodside's franking credits, is also likely to renew the focus on institutional investors' lack of long-term vision. There is universal agreement Shell's exit from Woodside's share register is a positive and that Woodside's share price, at $42.52, may come under selling pressure until Shell leaves.