TORONTO – Proxy advisory firm Glass, Lewis & Co. has recommended clients support the Sherritt International Corp.’s director nominees and resolutions in the mining company’s fight with a dissident shareholder group.
The recommendation is the second endorsement for the management nominees by a major proxy advisory firm in the company’s battle with activist investor George Armoyan and his attempt to join the Sherritt board of directors along with two other nominees.
Glass Lewis noted it was concerned with the company’s relative performance to others in its sector, but said the incumbent board and management — including chief executive David Pathe who took over in January 2012 — had been at the helm for a relatively brief period.
The advisory firm said that under Pathe’s tenure the company appears to have resolved some of its largest problems and shored up its balance sheet through the sale of its coal business.
“Overall, given the company’s positive trajectory on these fronts and the significant executive and board turnover in the last several years, we are hesitant to advocate additional leadership changes at this time,” the Glass Lewis report said.
“We believe the management nominees offer a balance of experience and fresh perspective and that electing all such nominees will allow the company to continue to build on its favourable momentum.”
The report recommended shareholders vote for all of Sherritt director nominees and resolutions and against all of the dissident resolutions.
Earlier this week, proxy advisory firm ISS also recommended shareholders support the management nominees to the board, although it did back a vote to support a dissident motion to stop “special payments to directors that are not aligned with shareholder value.”
However, the Glass Lewis report said the company “should retain the flexibility to create compensation packages, including appropriate perquisites, for its directors that are in line with their peers and commensurate of their services.”
Sherritt chairman Hap Stephen said the Glass Lewis report was the second important endorsement by a major proxy adviser.
“With unanimous support from the leading proxy advisers, momentum is clearly behind Sherritt’s director nominees,” Stephen said in a statement.
“However, it’s up to shareholders to vote only their blue proxy to ensure that George Armoyan and his handpicked dissident nominees cannot threaten good governance and sustainable value creation at Sherritt.”
Armoyan, chief executive of investment firm Clarke Inc. (TSX:CKI), represents about five per cent of Sherritt’s stock.
The dissident nominees include Armoyan, David Wood, chief financial officer of the Municipal Group of Companies, and Astor Group chief executive Ashwath Mehra, who is also the former chief executive of MRI Trading AG and senior partner for the nickel and cobalt businesses at Glencore International AG.
In addition to seats on the Sherritt board, the group wants to amend the company’s bylaws to require unanimous board support for any major acquisition and changes to how both Sherritt directors and executives are paid, as well as some additional perks it says they receive.
Sherritt’s (TSX:S) annual meeting is set for May 6 in Toronto.
Meanwhile, the dissidents say they will hold a webcast presentation and conference call for fellow investors this coming Monday to provide shareholders with “important information” describing the “compelling need for change” as they decide on the election of three new directors to the nine-member board.