This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Cliffs Natural Resources Breaks Activist's Way After ISS, Glass Lewis Support

Stocks in this article: CLF

Updated from 9:17 a.m ET to reflect Cliffs statement and additional information on proxy firm recommendations.

NEW YORK (TheStreet) -- Proxy advisory firms Institutional Shareholder Services and Glass Lewis have recommended that Cliffs Natural Resources (CLF) shareholders vote in favor of a proxy proposed by activist fund Casablanca Capital. Those recommendations come ahead of Cliffs' July 29 annual shareholder meeting and are Casablanca's first major break since proposing dramatic change at the struggling iron ore miner in early 2014.

For six months, Cliffs and Casablanca have battled over their competing strategies for the company's recovery from expensive acquisitions and a mistimed bet on a recovery in iron ore prices.

In mid-March, after lengthy discussions between Casablanca and Cliffs over strategy and board seats, it appeared a settlement to bring a slate of Casablanca-nominated directors onto Cliffs' board was near. However, talks soon broke down, causing Casablanca to take a proxy campaign directly to Cliffs shareholders.

Cliffs Natural Resources Heads to Shareholders

Push to Break Up Cliffs Turns Hostile

Casablanca Banking on Change at Cliffs

Casablanca asked for six seats on a nine-member board at Cliffs with one nominee, Laurenco Goncalves, acting as the company's senior-most executive officer. The firm also promised to withdraw Cliffs from what it sees as a failed international expansion, helping the company re-focus on its profitable U.S. operations.

By contrast, Cliffs asked shareholders to support its nine-member slate of board directors and a plan to cut the company's expense to preserve value for investors as it awaits a bottom in the iron ore market.

On Thursday, both ISS and Glass Lewis recommended shareholders support Casablanca's proxy. However, ISS and Glass Lewis only recommended shareholders vote for four of Casablanca's six-director slate. 

"The dissident has made a compelling case that a change to the composition of the board is necessary at this time," ISS said in its recommendation. "Ultimately, Cliffs will need a sober, expansive evaluation of its strategic alternatives, and the dissident has demonstrated the board would benefit from a greater shareholder perspective," the proxy advisory firm added.

"In our view, shareholder support for most of the Dissident Nominees would send a strong message to the board that the Company's long-tenured directors need to be held accountable for the Company's performance," Glass Lewis added.

Donald Drapkin, chairman of Casablanca, added that "we are extremely pleased that both ISS and Glass Lewis have issued strong recommendations in support of our campaign for change at the Board."

Egan Jones, a new entrant to the proxy advisory business, recommended shareholders support Cliffs.

Overall, the recommendations of ISS and Glass Lewis appear to give Casablanca an upper hand. Cliffs said in a statement that given the impact of cumulative voting, a recommendation to support Casablanca's proxy will allow the firm to elect a majority of the company's board. Cliffs urged shareholders to vote for their proxy.

Cliffs shares were little-changed at $15.19 in early Thursday trading.

On Tuesday, TheStreet reported that Casablanca appeared to have some key shareholder support in its campaign.

When Casablanca nominee Patrice Merrin was given a seat on Glencore Xstrata's board in late June, Cliffs shareholders reached out to Casablanca to ask for a replacement nominee, ensuring a full six-member slate, according to one source familiar with the situation.

Those calls indicated an appetite for change after years of apparent missteps. On July 1, Casablanca nominated James Sawyer, a longtime CFO at chemicals producer Praxair (PX), to replace Merrin on its six-director slate.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs