Elizaveta Sergina / Vedomosti
The Board of Directors of Sistema PJSFC has approved the list of candidates to the new Board to be elected at the company’s annual general shareholders meeting on June 24. There are 11 candidates nominated for 11 seats, the company informed. However, Peter Mandelson, a British politician, ex-European Commissioner for Trade, and Patrick Clanwilliam who chairs the Board of Directors of Eurasia Drilling Company are not on the list this time. The former has been elected to the Board since 2013, the latter for the past two years. They will now be replaced by Ron Sommer (Chairman of the Board at Sistema’s subsidiary MTS, ex-President of Deutsche Telekom, who also chairs the Board of Directors of India-based Sistema Shyam Teleservices) and Anna Belova, a Professor at Russia’s Higher School of Economics, a member of the Boards of Directors of Unipro and High-Speed Rail Lines.
Mandelson is not running in this election for rotation reasons, Sistema’s official spokesperson Sergey Kopytov commented. But Clanwilliam’s departure was triggered by his conflict with the company’s minority shareholders, as stated by Alexander Shevchuk, Executive Director of the Association of Institutional Investors.
Minority shareholders requested that Sistema replace Clanwilliam who has been the Board Chairman at Eurasia Drilling Company since 2007. Clanwilliam’s behavior as an independent director was far from perfect during the buyout by the management of Eurasia Drilling of their company’s shares, the minority shareholders believe. The buyout took place in October 2015 after EDC’s transaction with Schlumberger fell through. Valued at $22 in the potential EDC-Schlumberger deal, EDC’s securities came to be worth a mere $11.75 per share for buyout purposes, falling almost twice in value just a few months after the Schlumberger deal collapsed. The minority shareholders insisted that the price was obviously understated and expected independent directors to side with them, Shevchuk says. But Clanwilliam, just as the other directors, considered the price to be fair.
A well-known newcomer
In 2005-2011, Ron Sommer served as an independent director at Sistema who chaired the company’s Investor Relations Committee. The remaining nine candidates currently sitting on Sistema’s Board of Directors include the company’s principal beneficiary Vladimir Evtushenkov, President Mikhail Shamolin, First Vice President Felix Evtushenkov, MTS President Andrei Dubovskov, former Wimm-Bill-Dann co-owner David Yakobashvili, ex-President of Armenia Robert Kocharyan.
The buyout was completed in late 2015, but the minority shareholders failed to find an alternative candidate before last year’s annual meeting, Shevchuk says. In winter, when the lists of candidates were to be finalized, the buyout discussions were still in progress. What Sistema did was actually a goodwill gesture, the API Executive Director emphasizes: most of the API members cannot propose a candidate for the meeting being GDR holders. Under the law, holders of receipts are entitled to dividends and voting but not to the privilege of nominating candidates granted to holders of local securities, Alexander Shevchuk explains.
Now, according to Shevchuk, the minority shareholders have proposed Anna Belova instead of P.J. Clanwilliam.
The company made a point of supporting the choice of its shareholders, as confirmed by spokesperson Sergey Kopytov: Sistema always aims at complying with best corporate governance practices and has laid special emphasis on further cooperation with minority shareholders. Belova is a highly professional specialist with extensive experience of investments in various sectors; Sistema is hopeful that all the shareholders support her, Kopytov said.
Vedomosti was unable to reach Mr. Clanwilliam for comment.
Conflict with minority shareholders triggers backlash on Sistema independent director
Elizaveta Sergina / Vedomosti