Glass Lewis Recommends Voting "FOR" Early Termination of the Norilsk Nickel Board and "FOR" Two Independent Directors

Oct 08, 2010, 10:10 ET from RUSAL

MOSCOW, October 8, 2010 /PRNewswire-FirstCall/ -- UC RUSAL (SEHK: 486, EuroNext: RUSAL/RUAL), the world's largest aluminium producer and owner of a 25% stake in MMC Norilsk Nickel ("Norilsk Nickel" or the "Company"), announced today that Glass, Lewis & Co. ("Glass Lewis"), a leading independent institutional proxy advisory service, recommends that shareholders of Norilsk Nickel vote FOR the proposal to approve the early termination of the powers of the Norilsk Nickel Board of Directors and FOR two independent director nominees at the Extraordinary General Meeting of shareholders ("EGM") to be held on 21 October 2010.

In the report released 7 October 2010, Glass Lewis stated that "we are troubled by the current composition by the board and the disproportionate control wielded by one of the major shareholders." While that major shareholder, Interros Holding Co. ("Interros") is nominally represented by three members of the board, Glass Lewis noted that in addition to these three members "we find that two management members, Klishas and Kostoev, are recent former employees of Interros. Furthermore, we believe that the board chairman, who the Company has classified as independent, is an affiliated director [of Interros]."

In light of the heavy representation of Interros-affiliated directors on the board, Glass Lewis stated that "[i]n our view, a new board that includes additional qualified independent directors can provide the necessary oversight of management and ensure that neither of the two major shareholders can, on its own, control the decision-making on the board." In contrast, "the current board composition demonstrates that the Company's governance practices are still lacking."

Glass Lewis concluded, "[i]n light of possible procedural violations at the Company's 2010 AGM, as well as the unbalanced nature of the incumbent board, we believe it is in the best interests of shareholders to terminate the current board powers and allow for the re-election of the board."

Glass Lewis therefore noted that it recommends voting FOR Rusal's proposal to approve early termination of the powers of the Norilsk Nickel board of directors at the EGM.

With respect to the nominees proposed to Norilsk Nickel's board, Glass Lewis stressed the importance of independent directors: "We believe that the importance of independent oversight is paramount at this Company . . . [w]e believe the insufficient number of independent directors currently on the board imposes a serious limit to the objectivity of the Company's oversight" and "should be a major point of concern to shareholders."

"Based on our concerns with the lack of sufficient independent directors," Glass Lewis continued, "we believe shareholders should support nominees listed on [Rusal's] GREEN card. Of the independent candidates, we favor Messrs. Bebchuk, Holden and Wilkinson, each of whom are unquestionably independent. In addition, both nominees Holden and Wilkinson have industry experience that would greatly benefit the board."

Of Mr. Bebchuk, one of Rusal's nominees, Glass Lewis noted, "[i]n our view, Mr. Bebchuk's preeminence in the domain of corporate governance makes him uniquely capable of imparting the expertise necessary to create a fundamentally sound statutory framework for the Company."

Glass Lewis noted that Mr. Holden, another independent candidate, has "financial and auditing expertise, industry experience and impartiality to major shareholders" which "makes Mr. Holden fit to continue lending his services to the Company."

Glass Lewis therefore noted that it recommends voting FOR Bebchuk and Holden for election to Norilsk Nickel's board of directors.

Rusal agrees with Glass Lewis's criticism of the unbalanced nature of the current board and its emphasis on the need for independent directors, which echo similar points stressed by ISS Proxy Advisory Services in its report of 30 September 2010. We welcome the support of the nominees listed on Rusal's GREEN proxy card, and look forward to working with minority investors in Norilsk Nickel to further develop a balance board and substantially increase the value of Norilsk Nickel for all of its shareholders.


UC RUSAL ( is the world's largest producer of aluminium, in 2009 accounting for approximately 10% and 10% of global production of aluminium and alumina, respectively. UC RUSAL employs about 76,000 people in 19 countries, across 5 continents. UC RUSAL sells its products primarily in the European, Japanese, Korean, Chinese, South East Asian and North American markets. UC RUSAL's ordinary shares are listed on The Stock Exchange of Hong Kong Limited (Stock code: 486) and global depositary shares representing UC RUSAL's ordinary shares are listed on the professional board of Euronext Paris (RUSAL for Reg S GDSs and RUAL for Rule 144A GDSs).


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