HOUSTON (Dow Jones)–Transocean Ltd. (RIG) shareholders quashed a proposal that would have absolved the company’s directors and top management from liability for the contract driller’s 2010 activities, including the deadly Deepwater Horizon disaster.
The vote marks only the second time in Swiss corporate history that shareholders have rejected a board proposal.
The proposal, put before shareholders at Transocean’s annual meeting Friday in Cham, Switzerland, is mandated by Swiss securities law.
When granted, a so-called discharge means the firm and shareholders who voted for it lose the option of taking legal action against those who were in charge for a particular business year.
Transocean owned the Deepwater Horizon rig, which was drilling a well for BP PLC (BP, BP.LN) in April 2010 in the Gulf of Mexico when it exploded, killing 11 workers and unleashing the largest offshore oil spill in U.S. history.
Owners of 120.9 million shares voted against discharge while those holding 97.7 million shares voted for it, Transocean said in a Wednesday securities filing.
Board members and executives are not permitted to vote their shares in discharge proposals.
The minority of shareholders who voted for discharge will not be able to take legal action against those in charge of Transocean in 2010. Meanwhile those who opposed absolving the board and executives retain that right.
Two shareholder lawsuits have surfaced in Texas in response to the spill. One alleges, among other things, that Transocean’s management failed to monitor and made misleading statements about the company’s safety risks as well as its financial condition.
Such a rebuke is rare. Last May shareholders absolved the company’s management for 2009 operations by a margin of about 32-to-1, the first year Transocean’s annual meeting was conducted under Swiss rules after the company moved its headquarters there from Houston in late 2008.
But the results of Friday’s vote were not unprecedented. Last year UBS AG (UBS, UBSN.VX) shareholders voted against absolving management for activities in 2007 when the investment bank saw heavy losses.
That vote marked the first board-proposal rejection in Swiss corporate.
Shares of Transocean recently traded 1.36 higher at $67.92.
-By Ryan Dezember, Dow Jones Newswires