May 8 (Bloomberg) -- Kyrgyzstan, which is in negotiations to take a stake in Centerra Gold Inc.’s Kumtor gold mine, withheld support for the Canadian company’s chairman and two other directors at its annual shareholders meeting.
Kyrgyz state-owned miner Kyrgyzaltyn JSC, which has a 33 percent stake in Centerra, withheld its votes for Chairman Steve Lang, Centerra said today in a statement. It did the same for Terry V. Rogers, Centerra’s lead director, and Vice Chairman Bruce V. Walter.
Centerra doesn’t have a policy requiring successful nominees to receive a majority of votes. Forty-seven percent of the votes for Lang were for his re-election. He was advised by the company’s nominating and corporate governance committee to stay on as chairman, according to Centerra.
Centerra said the three directors are involved in the negotiations for Kyrgyzaltyn to swap its 33 percent stake in Centerra for a direct interest in Kumtor. A non-binding agreement last year was rejected by the Kyrgyz parliament following public opposition. A new accord was signed in December and approved this year by parliament, opening the way for more detailed talks.
In a speech at today’s meeting, Kylychbek Shakirov, deputy chairman of Kyrgyzaltyn’s management board, criticized Centerra’s corporate governance and pay practices.
“The age profile of the board of Centerra is mostly above 60 years,” Kylychbek Shakirov, deputy chairman of the management board at Kyrgyzaltyn, said in a speech at today’s meeting. “There has been little change over a number of years and there is strikingly little diversity.”
In a repeat of comments made at last year’s meeting, Shakirov said Centerra management’s pay is excessive by both Kyrgyz and international standards.
He also said that a $200 million dividend paid to Centerra from the fully owned subsidiary operating Kumtor was unexpected and “caused concern” because of its size and its timing, as it came during the government talks.
“One thing that is clear from the past year is that Centerra is trusted too little in Kyrgyzstan,” Shakirov said.
Many of the issues raised by Shakirov are part of the talks with the Kyrgyz government, Centerra Chief Executive Officer Ian Atkinson said at the meeting.
“Management has responded to the issues raised in writing to the relevant Kyrgyz authorities,” Atkinson said. The dividend payment was “a matter of routine business,” he told reporters after the meeting.
Centerra dropped 2.4 percent to C$5.39 in Toronto. The stock has advanced 43 percent in the past 12 months.
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