Tuesday, 23 August 2016
Last updated 5 min ago
Aug 19 2014 | 6:30am ET
The hedge-fund-fueled turnover at Cliffs Natural Resources continued Friday, with the resignation of a board member not nominated by Casablanca Capital.
Timothy Sullivan was one of five incumbent directors reelected to the 11-member board last month, alongside six picked by Casablanca, which had criticized Cliffs’ “extended period of gross underperformance and poor decisionmaking.” But he quit last week, blasting Casablanca’s directors for plowing ahead with their plans without seeking input from the rest of the board.
“I have served on many boards in my career, both public and pirvate,” Sullivan wrote to new CEO Lourenco Goncalves, who replaced Gary Halverson following Casablanca’s proxy victory. “I can assure you that I have never experienced anything like what transpired in our initial board meeting.”
“It was clear neither you nor the new directors wanted to hear anything that might be contrary to your pre-scripted plan,” Sullivan alleged. Casablanca wants Cliffs to spin off its international operations and to restructure its U.S. business as a master-limited partnership.
Casablanca and Goncalves said prior to the election that the new board would be independent and would not automatically adopt the hedge fund’s plans. But Goncalves did say in February that he planned to focus on selling Cliffs’ iron ore in the U.S. rather than abroad.
Cliffs made an announcement of its own on Friday, revealing that Casablanca’s proxy victory would cost it nearly $28 million in payments to former CEO Halverson and other officers and employees. The payments are required under the change-of-control provisions Cliffs’ board adopted last year. Halverson will get $11 million for just six months of work.