I believe that there is a strong message from 35-40 percent of the shareholder base that they want to have strong independent non-executive director representation on the Board. The two messages they gave to us when we went to talk to independent shareholders were: we want transparency in what happens, and we want all shareholders to be treated equally.

Prior to the annual shareholder meeting Brad Mills and I visited approximately 40 minority shareholders to inform them of the forthcoming annual shareholder meeting and to encourage them to exercise their voting rights in the forthcoming Board election.  We understand that 80% of all the company’s shareholders voted in the election.  If we recognize that 63% are easily identifiable then that suggests 17% were available to cast votes for non-majority shareholder or management candidates.  Brad Mills and I received most votes for any candidates on the list.  The minority shareholders which we met with were clear that they expected us to support all actions to maximise shareholder value, to vote and lobby against matters which favoured one shareholder over another, to vote for a consistent sustainable dividend policy, to vote for the appointment of an independent non-executive chairman and to resist any combination of Norilsk Nickel and any other company unless there are compelling economic reasons.

During my previous time on the Board I have always voted according to my analysis of what is best for the company and for all shareholders.  Both myself and Brad Mills have voted against proposals in the past which were not subsequently implemented in spite of a Board majority in favour.  We have previously developed an approach to discuss contentious issues before the Board meeting in order to develop solutions which work for all interested parties.

As a result of numerous requests from shareholders we have set up this resource to keep shareholders informed on our views.  We have also included email addresses should you wish to contact us directly with questions.  We will be available to meet with shareholders during the year and will conduct conference calls from time to time.  All this is designed to ensure that the voice of the independent shareholders is heard and properly represented in the Board room.

Executive directors on Board

If you look around at most international companies the size of Norilsk it's not uncommon to have the CEO, and maybe the CFO, and sometimes the COO on the board. Any Board has to be well-balanced between executive and non-executive directors. I don't think there is an overbalance here of executives and non-executives. Sometimes having a couple more executives there can actually be helpful because they feel more included in the decision-making process and it helps to get the message out to the rest of the people in the company.

Possible shareholder conflict

I would encourage all parties involved to talk to each other. They should have the same objectives at the end of the day: to maximize the value of the company, to maximize the dividend flow and to have the share price recognize the unique quality of Norilsk’s assets It was a big shame to lose Mr. Voloshin as chairman and I am sure he will be back on the Board in the future.

Titov as chairman

On the day of the shareholder vote when we were informed that Mr Voloshin had not received enough votes to be re-elected to the Board both Mr. Mills and myself agreed that it would be totally impractical for, in his case, an American citizen, in my case, an Englishman, to try and be chairman of the Board of a Russian national icon. It would be senseless from our perspective, it wouldn’t be well-received by the Russian public, and it would be almost impossible to be an effective chairman. Mr. Titov was the only sensible and acceptable independent candidate to our minds. We looked at everyone who was on the Board and who was Russian, and we felt it was not appropriate to nominate anyone from one of the two major shareholder blocks given the ability to nominate an independent candidate.

On possible merger with Rusal

The current relative values of Norilsk Nickel and Rusal are such that any merger would see Norilsk shareholders dominating ownership of the combined group.  I have not been presented with a compelling argument which suggests that there are significant synergies to be achieved through a combination at this point in time.  Finally Norilsk has current net debt of under US$1 billion and expected EBITDA according to analysts around US$6 billion whereas Rusal has current net debt around US$12 billion and current EBITDA according to analysts of around US$2 billion.

(Норильский Никель имеет текущий чистый долг в 1 миллиард долларов США и ожидается EBITDA по мнению аналитиков около $ 6 млрд, в то время как Русал имеет текущий чистый долг около $ 12 млрд и EBITDA текущего мнению аналитиков составляет около 2 млрд. долл. США.)

A combination of these two businesses on these metrics alone does not make sense for all Norilsk shareholders. Minority shareholders expressed no appetite for this transaction at this stage. 

(Слияние этих двух предприятий в соответствии с этими показателями сами по себе не имеет смысла для всех акционеров Норильске. Акционеры выразили отсутствие интереса  на данном этапе.)