"Though 2/3 of the company's market value has eroded over the 12-year tenure of the current CEO and many board members, the erosion accelerated within the last two years when the board took the reins as controlling shareholder Norilsk Nickel exited, launched an ill-advised diversification strategy away from the principal reason investors valued the company at a premium to begin with, and began bungling the execution of that strategy even before the acquisition agreements were completed."ISS expanded on its view that the case for change is "compelling" by writing:
"The case for change the dissidents have successfully articulated centers around a lack of sustained, disciplined execution on cost, an inability to develop a strategic plan [that] appeals to investors, and an inability to think through all the issues, such as valuation or sources and uses of cash …."ISS called the "failure" of the incumbent Board "bewildering." Accordingly, ISS concluded that "shareholders should vote on the GREEN card." "We are pleased that ISS recognizes the importance of change at Stillwater," said Gregory P. Taxin, Managing Director of Clinton. "A new, independent Board can help to protect and create stockholder value by bringing objective oversight to the Company." ISS' research report also says:
- "The most compelling concern for many shareholders ... has been the acquisitions of two exploration-stage mining companies, Marathon and Peregrine, at eye-popping prices, to fuel diversification strategy investors did not want, and the company does not appear able to fund."
- "Discussions with longer-term shareholders reinforce the dissidents' assertions that the principal flaw in the board's diversification strategy was diversification itself. As the board's current investor presentations now suggest, the company was the only pure-play US PGM producer, and the largest in North America. Investors might have bought into Stillwater shares to diversify their own portfolios, but they generally preferred to do such diversification on their own, and placed some premium on the ability to allocate capital cleanly by buying into a pure-play PGM producer in a stable regulatory and labor market."
- "Over the CEO's full tenure, as the dissidents have pointed out, the reality is ... sobering. Total operating expenses ... nearly tripled, and cash cost per ounce had nearly doubled, even as ounces of production declined modestly."
- "Compensation to the CEO ... has nearly doubled since 2009, and director compensation is up 60% since 2010."
- Dr. Engles, the founding CEO of Stillwater, was the "architect of the initial [ Stillwater] strategy and guided the [then] newly-public company to strong shareholders returns in the years after its IPO," noting that his nomination is "heartening on both the operating and strategic fronts."
- Ms. Merrin "has extensive board experience, across several industries, which suggests she could add a welcome sense of shareholder accountability to this board."
- Mr. McMullen has "expertise [that] appears particularly well-suited to the needs of the reconstituted board."
- Governor Schweitzer "would appear to offer significant strengths to this board."