Sherritt Shareholders Back Company Directors Amid Fight

Sherritt International Corp. investors rejected three nominees to the board proposed by activist shareholder Clarke Inc., which has criticized the nickel and energy producer’s performance and pay policies.

Each of Sherritt’s nine nominees received more than 146 million votes at a company meeting today in Toronto. The highest amount the activist’s nominees received was 54 million votes for Clarke Chief Executive Officer George Armoyan, who has been publicly calling for changes to Sherritt’s board since December.

Armoyan has criticized the company for a lack of strategic focus and excessive director pay. Clarke, which said in December it controls about 5.2 percent of Sherritt, led a group of other “concerned shareholders” who want the company to focus on reducing debt rather than potential acquisitions and are seeking the replacement of CEO David Pathe.

“Our board will continue to focus on the issues raised by Clarke and all of our shareholders as the board continues to work for the benefit of Sherritt and all of our stakeholders,” Sherritt Chairman Hap Stephen said today at the annual shareholder meeting. “Though this process has been distracting and has taken considerable time, we have learned a lot from some of the discussions with our shareholders and we are going to continue in that regard.”

Sherritt, which fell 36 percent in 2013, has rebounded 21 percent since the start of this year as nickel prices rose to a 14-month high after Indonesia, the biggest miner of the ore, banned exports. The shares fell 2.4 percent to C$4.47 at the close in Toronto.

Armoyan told reporters at the meeting today that Clarke will continue to monitor Sherritt. Increasing its holding in the company is one of the options being considered, he said.

Company Commitment

“We are committed to the company, we believe there is a lot of value in the company and hopefully they can surface it or we’ll help them surface it,” Armoyan said.

Sherritt mines nickel and sells power in Cuba, has oil and natural gas assets in Pakistan and Spain and reached commercial production status in January at a new $5.5 billion Ambatovy nickel and cobalt joint venture in Madagascar. The company sold its Canadian coal businesses to two buyers for C$946 million ($869 million) last month.

While Sherritt is focused on its current assets and reducing debt for the time being, the company will probably seek to grow by acquisitions in the “long term,” Pathe said in an interview after the meeting. He declined to provide a more specific timeframe. Purchasing assets makes more sense in the current market than building new mines as a means of growth, Pathe said.

“I do still believe that that is a way that a company like us can grow,” he said. “And long term I do intend to grow this company.”

The company remains bullish on nickel, which will be a focus for any potential growth, Pathe said.

“Fundamentally, over the next couple of years we think nickel is going higher.”

Before it's here, it's on the Bloomberg Terminal.