NYE – Shareholders of Montana’s largest public company on Thursday elected former Gov. Brian Schweitzer and three other dissident investors to Stillwater Mining Co.’s board of directors after alleging mismanagement by the current board.
But the shareholders also re-elected four current board members, including CEO Frank McAllister, meaning the two sides will have even numbers and will have to work together.
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.
McAllister counters that the dissidents want 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.
The maneuvering for votes has been reminiscent of a political election, complete with dueling public relations campaigns. For Schweitzer, it could be a prelude to a possible run to replace U.S. Sen. Max Baucus, a fellow Democrat who announced last month he’s stepping down in 2014 after six terms.
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.
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 McAllister for the good of the company.
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.
Analyst John Bridges with JPMorgan Chase & Co., said before the vote that the best outcome for shareholders would be the re-election of at least some current board members, given their knowledge of precious metals mining.
Yet Bridges added that the company’s board and management should face “consequences” over the 2011 decision to pay $450 million for a vast reserve of copper in Argentina. That project 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.
A second foreign acquisition, the Marathon palladium reserves in Ontario, is considered more promising.
“There have been mistakes at Stillwater, and there should be consequences,” Bridges said. “I’m scared by the concept of a whole new board having to come in and learn how to operate these difficult assets in Montana and learn the ins and outs of the palladium business.”
Stillwater shares climbed 23 cents, or 2 percent, to $12.05 Thursday before the voting results were announced.