Norilsk Nickel EGM votes against changing Board

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The Extraordinary General Meeting called by Norilsk Nickel in the wake of the disputed Annual General Meeting in June has voted against changing the board elected at the AGM.

The vote deals a blow to Rusal plans to have another of its representatives voted onto the board. The June meeting saw 4 representatives of Interros, which holds a 25% stake in Norilsk, and only 3 representatives elected from Rusal, which also has a 25% stake.

In the wake of the June AGM results Rusal claimed the voting process had been flawed, and that the results broke  an agreement between Rusal and Interros over Norilsk Nickel negotiated in November 2008, to have equal board representation and to refrain from attempting a takeover.

Interros claimed this week, that the actions of Rusal in pushing for an EGM and also claims that the Norilsk management was too close to Interros, coupled with a media campaign against Interros and Norilsk management, had pushed it to cancellation of the agreement.

In the immediate aftermath of the vote Rusal released s statement thanking minority shareholders, but claiming that Interros had influenced Norilsk management to vote against any changes to the Norilsk board.

“Despite the recommendations of leading, independent proxy advisory services ISS Proxy Advisory Services (“ISS”) and Glass, Lewis & Co. (“Glass Lewis”) that shareholders should vote to terminate the powers of the Norilsk Nickel Board of Directors and appoint independent directors, and the support of minority investors for these proposals, the voting pattern at the EGM indicates that under Interros’ influence the executive management voted with Treasury shares to prevent minority investors from electing new, independent non-executive directors. This contravenes all established principles of corporate governance.

RUSAL welcomes the fact that many Norilsk Nickel shareholders share our vision for the company. The fact that we were not able to secure enough votes will not distract us from the positive agenda which was outlined earlier in the process. RUSAL remains convinced that proper corporate governance, professional management and a clear growth strategy would deliver enhanced value for all shareholders.

There is a huge amount of trapped potential in Norilsk Nickel and RUSAL does not intend to miss this opportunity on the back of today’s result. We remain convinced that the company’s market capitalization could be doubled if the management were to pursue the highest standards in effective pricing, efficient cost management, strategic disposals, environmental standards and corporate governance, which conform with MMC’s status of a public company, a leader in its industry.

This dispute was never about the personalities involved, but was instead about a difference of view as to how the company should evolve. RUSAL has proved through its more than ten-year history that it is successful in developing business, enhancing value through modernisation projects, building new capacities, effectively controlling costs and best management. RUSAL directors will continue to draw on this experience around the Norilsk Nickel Board table to ensure that the company develops a new professional approach to managing the company.

RUSAL considers its investment in Norilsk Nickel as strategic and will continue to closely work with the company’s minority investors in order to elect a truly balanced Board of Directors to represent the interests of all shareholders.”

Speaking to Business RT, Maksim Sokov, Rusal Director of Corporate Strategy indicated Rusal would continue to push for non core assets to be brought to market in order to boost Norilsk Nickel’s value.

“We believe that there is a very simple programme which has to be put in place, and if implemented, can bring the value of the company to $50 billion or $60 billion in 18-24 months. And it is simple, I mean the core, is non core assets, there are a whole bunch of non core assets sitting on the balance sheet, which have to be monetized. They have to be either sold to the market or they have to be spun off, in the case of OGK-3.”