Ambatovy plant, Madagascar.
Photo by: Sherritt International Corp
TORONTO (miningweekly.com) – In its attempt to shake up the board of diversified miner Sherritt International, Halifax-based investment firm Clarke Inc on Thursday named its three nominees for election to the Sherritt board at the Toronto-based mining company’s annual and special meeting on May 6.
Under the leadership of Clarke president and CEO George Armoyan, a group of concerned shareholders nominated Armoyan, 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 a statement published on Thursday, the concerned shareholders sought to ensure that Sherritt’s board acted on behalf of all shareholders and increased its focus on creating shareholder value.
“Directors should share in the risks and the rewards alongside the shareholders of Sherritt. We believe a primary cause of Sherritt’s dismal performance is that the board has no incentive to improve the return to shareholders.
“The directors are not significant investors but are exceptionally well paid, no matter how the company or its shares perform. Sherritt belongs to its shareholders. Together, we can regain the value lost,” Armoyan said.
The concerned shareholders said that they control about 5.3% of Sherritt shares, and that their nominees had decades of international metals experience, as well as expertise in mine site and infrastructure development and financing.
The dissenting shareholders believed their nominees would also be better shareholder representatives, claiming that Sherritt’s current board and management only owned about 0.25% of the company’s common shares.
In March, the concerned shareholders had submitted four proposals to address what they saw as excessive and inappropriate compensation practises at Sherritt.
Among the proposals were allegations that company directors were paid $3.7-million in 2012, or $400 000 each, almost twice what they claimed directors at similar-size companies were paid. They also alleged that Sherritt’s CEO earned $2.77-million in 2012, when the company recorded a 24% decline in cash flow from operations and a 20% decrease in earnings before interest, taxes, depreciation and amortisation.
The concerned shareholders said the incumbent board adopted three of their proposals, but claimed them as its own and continued to reject shareholder board representation.
On Monday, Sherritt chairperson Harold Stephen attacked Armoyan, saying that he had “no experience in Sherritt's lines of business, a poor track record on corporate governance, no credible ideas for creating value beyond what management is already doing and a demand for a veto over potential growth plans, [which] threatens to throw a wrench into the company's progress”.
He warned shareholders they would likely be subjected to “hollow rhetoric” from Armoyan and urged them to “cut through the noise” and elect directors recommended by Sherritt.
Stephen said Sherritt’s performance was affected by low world prices for coal and nickel, two of its main commodities.
Sherritt, once Canada's biggest thermal coal producer, said in December 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.