ISS Recommends Voting for Holden & Mills Only as INEDS at 11th March EGM

As you all know, we are faced with another EGM on March 11

As you all know, we are faced with another EGM on March 11. The background of this EGM is Rusal's continued unhappiness with the management of Norilsk and the lack of transparency of certain decisions taken by management through to the board of directors. All of this is obviously occurring in the context of Interros and management attempting to buy out Rusal?s stake in the company. Given this background, the board of directors has recommended to shareholders to vote yes on the first item on the agenda (ending the term of the current board) and to elect a new board of directors. As we have noted before, what this really means for independent shareholders, is that they will be able to elect two members to the board given historic voting patterns of about 10% of the company's shares being voted by independent shareholders. It takes about 5% of the vote to elect a board member. With 27 names on the ballot it can be confusing for independent shareholders about how to vote.

In reality, changing the independent representatives at this juncture probably makes little sense, with only three months to go until the AGM, and given the need to produce final audited accounts and the lack of resolution of the buyout offer. This is essentially the conclusion of ISS (see below).

Gerard and Brad were first appointed INEDS in December 2008 and have spent considerable time understanding the company and recommending actions to improve performance and governance.

Gerard is currently chairman of the Audit Committee and a member of the Budget and Strategy Committees while Brad is Chairman of Strategy Committee and a member of the Audit Committee.  Given the complexity of Norilsk Nickel and the need for the Audit Committee to consider the 2010 IFRS accounts in the next couple of months there is a significant risk for independent shareholders if the Chairman of the Audit Committee is changed to someone with no or limited knowledge of the company.

Gerard and Brad strongly encourage independent shareholders to concentrate their votes on the two of us to ensure that they procure at least two well experienced independent directors on the new Board of Norilsk Nickel.

Executive Summary of ISS recomendations:

-       The company is engaged in a long-running proxy fight between its two largest shareholders, UC Rusal and Interros Holding Co., both of which hold approximately 25-percent stakes in the company.

-       This meeting has been called at the request of Rusal, which is seeking the support of other shareholders to terminate the current board and elect new directors. Rusal claims that the board is imbalanced, and that company management has taken certain actions without due oversight from the board, which have led to the loss of shareholder value

-       A meeting with the same agenda was convened on Oct. 21, 2011, also at the request of Rusal. At that meeting, Rusal was seeking the termination of the board and election of new directors, citing what it believed were shareholder rights abuses at the company AGM. Shareholders did not approve Rusal's proposal to terminate the board at the EGM. Rusal believes that at the current meeting, there is a greater chance that shareholders will approve the termination of the board

-       In a surprise decision, the company's board has recommended that shareholders vote FOR the termination of the board of directors, citing the advent of a new shareholder, Trafigura, which recently acquired an 8-percent stake. Interros also came out in favor of the termination, citing a need to avoid any further aggravation of the shareholder conflict.

-       ISS is recommending FOR the termination of the board, and FOR the two incumbent independent directors, Holden and Mills

-       These two incumbent nominees have the best qualifications from among the independent candidates to effectively contribute to board deliberationsas well as both of these candidates have the necessary experience to serve in key roles on the board's committees;

-       If a new board is elected at this EGM, it would function for only about three months before the new round of board elections at the AGM. Therefore, any new, non-incumbent directors would face a difficult time coming to understand the company and their role on the board and the committees in such a short timeframe.