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. Last Updated: 07/27/2016

Norilsk Pans Minority Investors

Shareholders of metals giant Norilsk Nickel on Monday elected a new board packed with representatives of its management and Interros holding, leaving minority investors in the cold.

The annual shareholders meeting also approved a meager dividend of 1.55 rubles per share, adding only 5 kopeks to the interim dividend of 1.50 rubles per share.

The candidacy of Alexander Ikonnikov, which was supported by investment funds grouped in his Investor Protection Association, did not get a seat on the board even though two other nominees by the minority shareholders dropped out in the 11th hour.

NAUFOR chairman Ivan Tyryshkin and NAUFOR board member Oleg Fyodorov withdrew their candidacies and threw their weight behind Ikonnikov on Thursday, but Norilsk Nickel officials said it was too late to strike their names off the ballots.

Norilsk Nickel spokesman Anatoly Komrakov said last week that Ikonnikov was nominated by 13 shareholders who own a combined 4.25 percent stake in the company. Interros owns 52.8 percent.

"We thought that the presence of outside shareholders was a very important issue," said Ikonnikov. "We will continue to promote sound corporate governance practices."

Norilsk Nickel has never had a director who represented minority shareholders on its nine-member board.

The board elected Monday includes Norilsk Nickel and Norilsk Mining Co.'s general director Djonson Khagajheyev, Norilsk Nickel trade union chairman Valery Glazkov, Norilsk Mining board member Vladimir Dolgikh, Interros legal director Andrei Klishas, Interros-controlled IFC's head of investments Alexei Pomazanov, IFC's legal director Tatyana Zotikova, Norilsk Nickel's board chairman Yury Kotlyar and head of corporate affairs Alexander Petrov.

The newly elected board primarily represents Norilsk management and the Interros holding.

Norilsk Nickel has a mixed record with its minority shareholders. Last year, the company provoked an outcry when it unveiled a restructuring proposal that offered to swap shares in the Norlisk Nickel holding for those of the Norilsk Mining Co. Minority shareholder stakes were to be diluted 11.5 percent in the swap, but Norilsk Nickel promised to compensate investors through dividend payments and an increase in market capitalization.

However, Norilsk has so far failed to explain its post-restructuring dividend policy.

"We will disclose the details upon the completion of the share swap," Norilsk's first deputy director Dmitry Zelenin said after the shareholder meeting Monday.

The swap, according to Zelenin, will be finalized within two months, after which shares in Norilsk Nickel will be delisted and substituted with those of Norilsk Mining.

"If some shares are not swapped by the deadline, we will extend the swap period for some time, probably a year," Zelenin said.

Norilsk turned a profit of 85.8 billion rubles ($3.06 billion) on sales of 134.6 billion last year, up 70 percent and 90 percent, respectively, from 1999.

However, the company decided to pay a meager 293 million rubles in dividends, creating a stir among some shareholders at the annual meeting Monday.

"Those who asked questions about dividends own five to 30 shares," said Zelenin, seeking to soothe investors in the meeting room.

"No matter what we pay, it will not be enough to pay their bills if they have no other sources of income," he said.

Norilsk Nickel's stock has swung wildly as the market priced in the effects of the restructuring.

It slumped to $6.50 by the end of November from $10 in May, but after the company promised to play fair with its shareholders and brought some clarity into its restructuring proposal, the stock took off. It ended at $14.04 on Monday, up 2.9 percent on the day.

Norilsk remains one of the largest contributors to state coffers. In 2000, it paid in 47.1 billion rubles, or 2.5 percent of consolidated budget revenues.

Last year's stellar performance was in a large part due to a spike in the precious metals prices.

Palladium more than doubled over the year to $954 per ounce and platinum surged 38 percent to $611 per ounce. Meanwhile, the share of precious metals in the company's revenues increased to 45.5 percent from 37.5 percent at the expense of copper, nickel and cobalt.

Norilsk officials said Monday they are hoping President Vladimir Putin will approve the liberalization of export regulations for platinum group metals yet this year.

"The quota system does not match Russia's desire to join the World Trade Organization," board chairman Yury Kotlyar said.