TORONTO (miningweekly.com) – Corporate governance analysis and proxy voting firm Institutional Shareholder Services (ISS) has concluded that dissident Sherritt International shareholder, Halifax-based investment firm Clarke Inc, has not made a compelling case for change, recommending that shareholders vote for Sherritt’s slate of director nominees at the company’s annual and special meeting on May 6.

In making its recommendations, ISS met with both sides of the proxy contest and considered the validity of the arguments and the outcome that is in the best interests of shareholders.

“This is an important endorsement from a leading independent third-party proxy adviser. Sherritt has positive momentum and a board with experienced directors. George Armoyan and his hand-picked dissident nominees threaten Sherritt's value creation,” Sherritt chairperson Harold Stephen said.

Clarke had nominated resource advisory and investment business Astor Group CEO Ashwath Mehra and 30-year accounting and international business veteran and Municipal Group of Companies VP of finance and CFO David Wood for election to the Sherritt board.

In reaching its decision, ISS stated that analyst sentiment appeared to be generally optimistic with Sherritt’s current overall outlook.

“In light of the … positive changes the board has made in terms of director compensation structure, we believe that Sherritt's director compensation is now generally aligned with shareholder interest and should not constitute a major cause of concern going forward,” ISS said.

Further, the proxy adviser noted that the recent deterioration in Sherritt’s operating performance appeared to be mainly driven by the discontinuation of the coal division and the lower commodity prices, which could be proven by the company's total-shareholder-return outperformance against its peer group of nickel producers.

ISS said that Sherritt’s management had demonstrated a high level of shareholder responsiveness since the dissident started its campaign, and a number of positive governance changes were implemented, particularly regarding director compensation.

ISS also noted that management seemed to be clear on its current strategic priorities, including reducing the total debt, which could be achieved by leveraging the proceeds from selling the coal division and lowering the cost structure.

As the company's flagship Ambatovy nickel project, in Madagascar, had recently started commercial production and given the recovery of the nickel price in 2014, which had already been reflected by the recent increase in the company's share price, shareholders may wish to allow some more time for management to deliver its plan, the proxy advisory firm said.

Once Canada's biggest thermal coal producer, Sherritt announced in December that it would sell its coal business for C$946-million to focus on nickel and oil after years of weak demand and prices. Sherritt mines and refines nickel from lateritic ores with projects and operations in Canada, Cuba, Indonesia and Madagascar.