Suncor cancels investor update in wake of CEO’s resignation
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CALGARY – Suncor Energy Inc. has cancelled its planned investor update about oilsands operations and safety in the wake of last week’s resignation of chief executive Mark Little.
The Calgary-based energy giant had scheduled the update, which was to take place Wednesday, months ago in response to investor concerns about operational performance and workplace safety. The company had pledged to provide an update on what it’s doing to improve safety and operations at its oilsands facilities.
Last Thursday, however, Suncor suffered another workplace death, this time of a contractor at its Base Mine near Fort McMurray, Alta.
One day later, the company announced Little would immediately step down. In a news release, board chair Michael Wilson cited “the critical need for change” due to Suncor having “fallen short” of its own safety and operational standards.
Earlier this spring, Suncor found itself in the crosshairs of well-known U.S.-based activist investor Elliot Investment Management, which wrote a letter calling for an overhaul of Suncor’s board and management. Elliot highlighted Suncor’s safety track record, as well as other operational challenges and the company’s lagging share price.
Elliot declined to comment Monday on the latest developments at Suncor.
But Eight Capital analyst Phil Skolnick, who downgraded Suncor’s stock to a “Sell” rating on Monday, said in a note that Suncor requires “real changes,” not just a new CEO. He pointed out that the at least 12 deaths that have occurred at Suncor sites since 2014 is “something that we have never seen in the 25 years of covering the sector.”
“The issue isn’t a one-person situation,” Skolnick wrote. “This is about the corporate culture where accidental deaths have plagued the company even prior to Mr. Little’s tenure as CEO (which) began in 2019.”
In addition to last week’s workplace death, Suncor’s tarnished safety record includes the death of a contractor in a truck crash at the company’s Base Mine site in January, as well as an incident in 2021 involving a bulldozer colliding with a pickup truck at the Fort Hills oilsand mine. That incident resulted in the deaths of two contract workers.
Another worker died in 2021 when the bulldozer he was driving fell through the ice of a tailings pond at Suncor’s Base Mine.
The company also had a fire at a refinery in March that resulted in an injury.
Suncor shares were trading at $41.42 as of midday Monday, down 2.4 per cent from Friday’s closing price.
Suncor’s share price is up more than 35 per cent year-to-date, and up one per cent since Elliot disclosed its activist role on April 28. But Skolnick said the most recent fatality is proof that a “meaningful overhaul” of Suncor’s corporate culture is needed — and that will take time and money.
“This is not about a dividend cut, multiple operational issues, and the inability to meet guidance, all of which (Suncor) has suffered from,” Skolnick said. “This is about people risk.”
Rob Stewart, a Calgary-based workplace safety expert, said he doesn’t think Suncor is any worse than its competitors when it comes to having proper safety procedures in place — they’re just a larger company with more exposure, and have had a string of “bad luck.”
But that doesn’t let Suncor off the hook, Stewart said, adding all oilsands companies need to do a better job of creating an environment where workers feel safety is prioritized over profits and schedules.
He added simply replacing the CEO won’t cut it, because many times the problem stems from the middle management level.
“There is a culture (in the industry) of, ‘you can’t make a mistake, and you can’t ask for help,’ ” Stewart said.
“Safety can be costly, it can be inconvenient, it slows things down. And that’s why people take shortcuts.”
Kris Smith, executive vice-president of Suncor’s Downstream division, has been named interim CEO. Suncor’s board has formed a committee to conduct a global search to find the company’s next CEO.
Suncor said its investor update will be held this fall instead.
This report by The Canadian Press was first published July 11, 2022.
Companies in this story: (TSX:SU)