(Adds reaction from Sherritt chairman and activists, details of proxy paper)
By Allison Martell
TORONTO, April 21 Sherritt International Corp shareholders should not vote for a slate of nominees for the Canadian miner's board put forward by activist investor George Armoyan, a leading proxy advisory firm recommended on Monday.
In a copy of the report seen by Reuters, the firm, Institutional Shareholder Services (ISS), concluded that "the dissident has not made a compelling case for change to the board level at this stage".
"We are quite pleased," Sherritt Chairman Harold Stephen said in an interview. "We have very positive momentum in voting, and we've received comments of support and, more importantly, votes from a number of our largest shareholders."
Armoyan is chief executive of Clarke Inc, a Halifax, Nova Scotia-based investment holding company listed on the Toronto Stock Exchange.
Shareholders affiliated with Armoyan, including Clarke, beneficially own some 5 percent of the shares of Sherritt, a nickel, oil and gas producer.
ISS, however, backed one of Clarke's special resolutions, which would block special payments to directors. It acknowledged that Sherritt has recently cut payments to directors, but endorsed the resolution to try to ensure that no more special payments are created in the future.
The activists had criticized payments made to Sherritt's directors to compensate them for the impact of the U.S. Helms-Burton Act. Sherritt has operations in Cuba, and some of its officers and directors have been barred from the United States because of Helms-Burton, which sanctions companies that trade with Cuba.
Sherritt, which holds its annual shareholders meeting on May 6, has changed its policy on compensation for Helms-Burton. As of March 31, only directors who are actually barred from the United States will get extra compensation. The payments are no longer automatic, as not every director is affected.
The company stopped paying for spouses to travel to board meetings in 2013, and has also eliminated medical and dental benefits for directors, according to the report.
In a release, Armoyan's activist group said that the ISS report shows that its campaign is "driving change" at Sherritt. It said it strongly disagrees with the firm's conclusion, however. (Editing by Steve Orlofsky; and Peter Galloway)