Activist demands Sherritt board revamp
A proxy battle between activist investor George Armoyan and Sherritt International appears well underway as the mining company announces a date for a special shareholder meeting.
Clarke, a Halifax, Nova Scotia-based fund actively tasked with helping its portfolio of companies ‘improve performance and build value’, has laid out several proposals for Sherritt, a mining company that specializes in the extraction and refining of nickel ore and coal in Canada, Cuba, Indonesia and Madagascar. Clarke currently owns 5.1 percent of Sherritt.
The proposed changes to Sherritt’s structure include plans reduce the size of the company’s board to seven from nine and appoint three new directors, including Armoyan, Clarke’s CEO, and two of his colleagues.
A statement from Sherritt released in reply to Clarke’s proposals, however, points out that the activist has actually called for four directors to be removed before three more are elected. Armoyan’s suggested board, then, would have eight members rather than the seven that are requested.
Nonetheless, Sherritt has been prompted to meet with its investors and potentially push them toward a proxy vote. ‘Despite this inconsistency and other deficiencies, Sherritt has determined that it is in the best interests of the company and its shareholders to proceed to call the special meeting to be held on May 6, 2014 together with the annual general meeting,’ the statement reads.
Armoyan has also claimed that several of Sherritt’s board members are overpaid. He told Bloomberg that a comparison of Sherritt’s share price and board compensation is ‘mindboggling’, and that efforts to counteract his proposals were akin to board members protecting ‘their golden goose egg.’
Clarke’s representatives also take issue with Sherritt’s decision to pre-emptively pay directors and executives compensation for the effects of the US Helms-Burton Act, which might prevent them from entering the country because of the corporation’s operations in Cuba.
Sherritt currently pays directors ‘in recognition of the actual or potential hardship, loss of opportunity and emotional distress suffered by the directors and their respective families’ as a result of the law, according to a letter made public by Clarke. The law, which serves as an extension of the US’ trade embargo with Cuba, has seen some directors denied entry into the US because of Sherritt’s large mining operations in the country.
Any plans to reduce Sherritt’s board to having fewer than nine members will require two thirds of the company’s shareholders to approve a special resolution.