Billionaire Vladimir Potanin retained the biggest presence on Norilsk Nickel's board of directors on Monday, as shareholders in the Russian miner backed the independent directors he nominated.
United Company RUSAL, a one-quarter shareholder in Norilsk, also gained three of the nine seats on the board of the $50 billion firm at the heart of rival merger proposals to create a Kremlin-backed mining titan to compete with the world's biggest.
Interros, Potanin's investment company, said it also took three seats, with the remaining three won by independents. Proxy advisory firm ISS, however, said one of these independents was in fact representing Interros -- giving Potanin four seats.
We salute the election of two independent board members but we do not expect that they will support RUSAL, Deutsche Bank mining analyst Mikhail Seleznyov said.
Norilsk, whose Arctic mines supply a fifth of the world's nickel and more than half of its palladium, is juggling competing merger proposals from some of Russia's richest men.
UC RUSAL, which acquired its stake in April, is pursuing a full merger, while Potanin has countered this idea by agreeing to an asset swap with another metals billionaire, Alisher Usmanov.
At Monday's high-stakes annual general meeting, Potanin, who controls just under 30 percent of Norilsk, was elected to the board along with acting chairman Andrei Klishas and Andrei Bugrov. All three represent his investment company, Interros.
UC RUSAL's three representatives are Oleg Deripaska, its billionaire majority owner; Chief Executive Alexander Bulygin; and shareholder Mikhail Prokhorov -- Potanin's ex-business partner, who earned his stake in UC RUSAL in part-exchange for the Norilsk shares he sold to the aluminum firm.
Shareholders also reelected current independent Norilsk board members Heinz Schimmelbusch and Guy de Selliers, both of whom were supported by Interros. RUSAL had supported de Selliers and Tye Burt, CEO of Canadian miner Kinross Gold.
The ninth board member is Michael Levitt, director of Stone Tower Capital LLC.
Despite the fact it was us who advanced Mr. Levitt, this does not mean that he is our representative, an Interros spokeswoman said.
UC RUSAL, without naming any nominee, said it considered one of the directors not to be independent.
We would like to note that one of the directors initially nominated by Interros as independent is not independent according to both ISS and recent comments by Interros, UC RUSAL's press office said in an e-mailed statement.
Norilsk Nickel Chief Executive Denis Morozov said: There are two ways to judge the number of independent directors.
According to our consultants' opinion, there are two independent directors. If we judge according to our corporate standards, then Mr. Levitt also falls under this category, he told a news briefing after the shareholders meeting.
Deutsche Bank's Seleznyov said: We believe that four board members are closely linked to Interros.
He added: Until an increased board is elected, Interros will have a significant influence over the board's decisions.
A bigger board is likely after shareholders voted on Monday to increase the number of directors to 13 from nine. This would theoretically allow every nominee in Monday's vote to win a place, boosting the number of independent directors to five.
But Morozov said a new board could only be elected if shareholders owning at least 10 percent were to call an emergency shareholders' meeting.
And this would take no less than 90 days, which means that this board will work no less than three months, he said.
Morozov added that 23 percent of shares, all representing minority shareholders, did not participate in the voting.
Norilsk shares closed down 2.1 percent on Monday at 5,905 roubles, a bigger fall than that on the MICEX bourse's mining and metals index .MCXMM>, which declined 0.4 percent. (Editing by Robin Paxton and Gerald E. McCormick)
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