Shareholders shake of Stillwater’s board of directors

May 3, 2013

Former Montana Gov. Brian Schweitzer was elected to Stillwater Mining Co.’s board of directors along with three other dissident investors.

Stillwater Mining Co. is the state’s largest public company and has been saddled with allegations of mismanagement from a group of investors including Schweitzer.

Shareholders also re-elected four current board members, including CEO Frank McAllister.

Schweitzer and the Clinton Group, a New York hedge fund, charge that mismanagement by McAllister and the company’s board has put more than 1,600 Stillwater jobs at risk, The Associated Press reported.

McAllister countered that the dissidents wanted to take over the company on the cheap as it’s poised to expand production at its platinum and palladium mines in the Beartooth Mountains north of Yellowstone National Park.

Schweitzer said after the vote, which still must be certified, that electing four members of the dissident group was a “huge victory.”

Earlier, Schweitzer’s side rejected a proposed settlement to split the board evenly and avoid a vote. The former governor said before the vote that nothing short of McAllister’s ouster would be acceptable for his side, The Associated Press reported.

An evenly split board would offer “the worst governance you could imagine,” he said then.

But with the shareholder vote effectively producing the same result, Schweitzer said afterward that he is willing to work with the directors for the good of the company.

One point of contention between the two sides is the company’s 2011 decision to pay $450 million for a vast reserve of copper in Argentina, which has been panned by some Stillwater investors because of political uncertainty in the country and the billions of dollars that would be needed to build a mine.

McAllister said the message from shareholders was clear: They want the company to stay focused on its Montana platinum and palladium mines.
McAllister will remain CEO for now but said he expects a transition to a new one in the future. He did not give a timeline for the change.

Besides Schweitzer, members of the dissident group elected include Patrice Merrin, Michael McMullen and former Stillwater CEO Charles Engles.

The current board members re-elected include McAllister, George Bee, Michael Parrett and Gary Sugar.

The Clinton Group controls roughly 1 percent of Stillwater stock. But its bid to oust a majority of Stillwater’s eight-member board was bolstered by support from two investment research firms, whose recommendations were expected to influence institutional investors with large enough stakes in the company to decide the matter.

Stillwater, with a market value of more than $1.3 billion, runs the only platinum and palladium mines in the United States. The company reported a net income of $43 million in 2012 based on revenue of $800 million.



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