Concerned Sherritt Shareholders Issue Open Letter From Nominee George Armoyan

HALIFAX, April 29, 2014  /CNW/ - The Concerned Shareholders of Sherritt International Corporation ("Sherritt") today issued an open letter to fellow shareholders from one of their nominees, George Armoyan, President and CEO of Clarke Inc, (CKI; CKI.DB.A) a major Sherritt shareholder. The letter responds to repeated malicious, untrue, personal and defamatory statements made by the Sherritt Board of Directors.

The text of the letter follows:

April 29, 2014

Dear Fellow Shareholders

Enough is enough. The Sherritt Board of Directors has been trying to mislead you for too long.

They have distorted their performance and made false claims about their actions. 

They have deliberately misinformed you by issuing an Information Circular they knew was false and undermined the integrity of this shareholder vote by sending out a form of proxy that prevents you from voting for nominees you may want to support. 

They have attacked me personally and questioned my integrity. I don't like it, but I can take it.

What I cannot take is that they are not telling the truth to you, their own shareholders, the owners of the company. That is unacceptable.

Sherritt Attacks Shareholders

I will put my track record for value creation up against theirs any time. One example is Clarke. Since I joined in December 2001, Clarke has generated a total shareholder return of 413%. During that same period, Sherritt shareholders gained just 3%. Adjusted for inflation, Sherritt shareholders are worse off today than they were 12 years ago.  Under the current Board they are far worse off by any measure.

For trying to change this, the Board calls me "disruptive" and "erratic" even though they have never worked with me. But, if ever there was a complacent and underperforming company that needed some disruption, that company is Sherritt.

As an entrepreneur, I have had my successes and my failures, although more success than failure. I am not perfect and have never claimed to be. There are two important differences between me and the Sherritt Board. First, when I fail I admit it and learn from it. This Board has failed and refused to take any corrective action until it was forced to by shareholders. And second, I believe in my ability and put my own money at stake. I own my successes and failures.   

I have sat on 21 public company boards in my career and the average return during my tenure is 105%. Not all succeeded, but others produced returns in excess of 1,000%. That is something that no director of Sherritt can claim.

You should also know that the Board's version of the events leading up to the nomination of the Concerned Shareholder nominees is untrue. We complied with all of Sherritt's rules to nominate three qualified individuals and we advised the Board well in advance that we would. They set out to mislead you by issuing an information circular and form of proxy which they knew were incorrect at the time. Their proxy does not include our nominees. Despite our repeated requests, they have refused to correct this misleading disclosure, meaning they have deprived all shareholders of the opportunity to vote for our nominees. The Board's refusal to act in the interest of shareholders is why we have asked for orders from the Ontario Securities Commission requiring a correction. The Board appears willing to do anything in this proxy fight to keep their jobs and extravagant pay. Only the GREEN proxy includes all the names of the actual nominees for election at the May 6 Annual and Special Meeting.  The Sherritt proxy robs you of your right to vote for the directors you may want to choose. That is an attack on your rights as shareholders.

I find this behavior shocking and appalling. This alone would justify changes to the Board, even if the Concerned Shareholders had nothing else to offer – which we certainly do.

Directors Improperly Siphon Money from Sherritt

The Board will not admit its mistakes, even when it claims to have "corrected" them. The Helms-Burton payments are a good example. For years, the Board has paid each director $150,000 a year to compensate them for purportedly being unable to travel into the United States. We have reason to believe that seven of the directors are not affected by these supposed restrictions. To our knowledge no director appointed in the past five years has been barred. Only under shareholder pressure has the Board promised to stop these payments in the future. But for at least five years, directors have been taking these payments improperly – a total of $2.2 million in shareholders' money. They have taken that cash under false pretenses.  Anywhere else, that could be considered fraud.  

What's more, the current directors put $150,000 a year in their pockets with these payments and claim it should not be considered part of their compensation.  That is absurd.

For years as well, the Board travelled in private jets and paid the travel expenses of their spouses, at untold cost to the shareholders. Only shareholder pressure put an end to that practice.

The truth is the Board has been caught with its hand in the cookie jar. It says it won't do it again. And it expects shareholders to trust the current directors.

It is not enough to stop taking money from shareholders. The Board should return it.

Bad Performance and Bad Governance

The Board paints a rosy picture of Sherritt's performance but the facts tell a different story as we have shown in our circular – no coherent strategy, poor leadership, failed investments, rising costs and a long and deep decline in the share price.  That's not caused by commodity prices. That's a weak Board.

It is as if the Board does not care about any of these failures and their effect on shareholder value. That is because it does not have to care. The Board and management own less than 0.25% of Sherritt's shares. A laughable amount. They have no vested interest in the share value that matters to you. Instead, they pay themselves more than $362,000 a year, mostly in your cash rather than equity. There is no alignment with shareholders' interests and no incentive for the current directors to create shareholder value.

I believe directors should have "skin in the game" and a lot of shareholders agree with me. It is key to good governance. Mr. Stephens appears to disagree. Recently shareholders of Labrador Iron Ore Royalty Company, have called his independence as a director "questionable", with inter-connections with other directors, and his alignment with shareholders "lacking", with all board members owning just 0.1% of the outstanding shares.

The ISS Recommendation

The Board leans for support on a report from Institutional Shareholder Services Inc.

Unlike you, of course, ISS is not a Sherritt shareholder and has not suffered under the current Board. And, for whatever reason, ISS believed the flimsy claims and empty promises of the Sherritt Board.

ISS said, in effect, that the Board should be maintained because both Sherritt and its peers are mediocre. But failure is failure and it is never a reason to maintain the status quo. ISS believed that the Board that destroyed $1.4 billion in shareholder value in the past three years was the right Board to lead Sherritt into the future. This defies logic and common sense.  ISS also found that the compensation the Board pays itself and management is acceptable by comparing it to larger non-nickel companies. They also excluded the directors' Helms-Burton payments and retirement allowances. That money is paid by you; it is ridiculous not to recognize it is compensation.

You and I know that Sherritt's performance and its compensation levels are not acceptable. The performance has destroyed value and the compensation structure pays the Board and management exorbitantly for doing it.

ISS did acknowledge that the intervention of the Concerned Shareholders and the possibility of a proxy contest was followed by some improvement in the Board's behavior. I agree, but also point out that most of what the Board claims as "action" is only promises that have not been fulfilled.

It should not take pressure from shareholders and the prospect of a proxy contest to get a board to do the right thing.  At Sherritt it does.

Rebuilding Value

The Board attributes the recent increase in Sherritt's share price to the Board's actions and rising nickel prices. But it can just as easily be credited to investors' confidence in the Concerned Shareholders' ability to drive positive change at the Company after their election to the Board.

That confidence is well-founded. The Concerned Shareholders' have nominated three strong, experienced directors. Ashwath Mehra built one of the largest base metals businesses in the world at Glencore and has years of direct experience with nickel. Incredibly, the current Board has no one with any nickel experience at all. And Sherritt claims to be a nickel company. For the Board to attack Mr. Mehra and not acknowledge his expertise is ludicrous.

They also attack David Wood although he brings 30 years of experience in finance, international construction and infrastructure development. These are skills that are clearly lacking on the current Board since it allowed development of Ambatovy to come in two years late and at more than twice the original budget. Mr. Wood's flaw, according to Sherritt, is serving on a board with me in the past. This is hardly unique in corporate Canada and he is not beholden to me in any way. To claim otherwise is simply irresponsible.

It would be false modesty if I did not say I am fully qualified to be a director of Sherritt and bring attributes that are obviously missing from the Board: entrepreneurial drive, a common sense approach to business, and a vested interest in rebuilding shareholder value. I represent one of the largest shareholdings in Sherritt and that true representation is badly needed on the Board. We want to see increased long-term value for the benefit of all shareholders. We are not seeking to dominate the Board or even have undue influence. We simply believe that shareholders should be represented by three seats on a Board of nine. We cannot force the Board to do anything. We can only recommend. And what we will recommend is that the Board define its strategy, align its interests with shareholders, look for a qualified CEO, develop better capital allocation, and control costs.

These are all common sense steps that any responsible board would take in Sherritt's circumstances.

We ask for your support in achieving them by voting the GREEN proxy in favour of positive change at Sherritt.

It is not responsible for Sherritt's current Board to continue to mislead and attack its own shareholders.

We ask you send a message to the Board, using the GREEN proxy. Every vote counts. Make sure your voice is heard.

Thank you for your interest and the support you have demonstrated.

George Armoyan

[Letter ends]

The Concerned Shareholders posted a comprehensive presentation on the need for positive change at Sherritt at their website The presentation provides details of their three experienced and highly qualified nominees to the Board and the value-creating steps its nominees would recommend to the majority of the Board after election.

The complete Concerned Shareholders Information Circular can also be downloaded at and

Sherritt shareholders are advised to vote using the GREEN form of proxy that accompanies the Concerned Shareholders' Circular. They should disregard any proxy sent by Sherritt management and, even if they have voted a blue management proxy, they have the right to change their vote using a later-dated GREEN proxy. Only the last-dated proxy is counted.

In order for the GREEN proxy to be counted, it must be submitted consistent with the instructions on the proxy and must be received no later than 5:00 p.m. Toronto time on Thursday May 1, 2014.

Discard the blue proxy. Vote only the GREEN proxy for positive change at Sherritt.

Sherritt shareholders with questions can call 1-800-294-3174 or visit our website at for more information.

About the Concerned Shareholders of Sherritt

Members of the Concerned Shareholders of Sherritt have been investors in the Company since May 2011. They are led by Halifax-based Clarke Inc. which invests in a variety of private and publicly-traded businesses and participates actively where necessary to enhance performance and increase the return to shareholders. Clarke's securities trade on the Toronto Stock Exchange (CKI; CKI.DB.A); for more information about Clarke, please visit the website at

Statements Regarding Forward-Looking Information

This news release may contain forward-looking statements or forward-looking information within the meaning of applicable securities laws, including, without limitation, in respect of Clarke's and Sherritt's priorities, plans and strategies for Sherritt and Sherritt's anticipated financial and operating performance and prospects. All statements and information, other than statements of historical fact, included or incorporated by reference into this Circular are forward-looking statements and forward-looking information, including, without limitation, statements regarding activities, events or developments that Clarke expects or anticipates may occur in the future. Such forward-looking statements and information can be identified by the use of forward-looking words such as "will", "expect", "intend", "plan", "estimate", "anticipate", "believe" or "continue" or similar words and expressions or the negative thereof.

We caution readers of this news release not to place undue reliance on forward-looking statements and information contained in the news release, which are not a guarantee of performance, events or results and are subject to a number of risks, uncertainties and other factors that could cause actual performance, events or results to differ materially from those expressed or implied by such forward-looking statements or information. Sherritt's shareholders are cautioned that all forward-looking statements and information involve risks and uncertainties, including those risks and uncertainties detailed in Sherritt's continuous disclosure and other filings with applicable Canadian securities regulatory authorities, copies of which are available on SEDAR at We urge you to carefully consider those factors.

The forward-looking statements and information contained in this news release are expressly qualified in their entirety by this cautionary statement. The forward-looking statements and information included in this news release are made as of the date hereof and Clarke undertakes no obligation to publicly update such forward-looking statements or information to reflect new information, subsequent events or otherwise, except as required by applicable laws.

Additional Information

Sherritt has announced that it will hold its annual meeting of shareholders on May 6, 2014. The Concerned Shareholders' nominees will be considered for election at that meeting. The Concerned Shareholders filed a Circular on April 9, 2014, together with a GREEN proxy or voting instruction form. SHAREHOLDERS OF SHERRITT ARE URGED TO READ THE CIRCULAR CAREFULLY BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and shareholders will be able to obtain free copies of the Circular and any amendments or supplements thereto and further proxy circulars at no charge on SEDAR at In addition, shareholders will also be able to obtain free copies of the proxy circular and other relevant documents by calling the Concerned Shareholders' proxy solicitor, CST Phoenix Advisors at 1-800-294-3174.

SOURCE: Clarke Inc.

For further information: Shareholders, CST Phoenix Advisors, 1-800-294-3174,; Dustin Haw, Vice President, Investments, Clarke Inc., 416.855.1928, 416.930.1982,; Media: John Lute, Lute & Company, 416-929-5883,


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