Northern Star Resources has rejected activist investor Elliott Investment Management’s proposal to install six new directors, arguing that the hedge fund’s demands would undermine proper corporate governance, according to a report by Northern Miner.
Australia’s largest gold producer said Elliot had yet to demonstrate a clear need for changes to t its strategy and would not agree to appoint at least three of Elliott’s nominees without first conducting a proper assessment of their credentials and suitability for the board.
Elliott has proposed six candidates, including former Anglo American chief executive Mark Cutifani, as it seeks greater influence over Northern Star’s strategic direction. The activist has argued that a reconstituted board would provide stronger oversight for incoming chief executive Suresh Vadnagra and facilitate a detailed review of the company’s operations and strategy.
Northern Star chair Michael Chaney rejected the approach, saying Elliott had made demands that no responsible board should accept and had failed to identify specific measures that were not already being considered or implemented by management.
The disagreement has developed against the backdrop of a broader leadership transition at Northern Star. Vadnagra is preparing to take over as CEO, while the miner has also made changes to its board and committee structure.
Former BHP director Terry Bowen has joined Northern Star as an independent non-executive director, replacing John Fitzgerald as chair of the audit and risk committee.
Northern Star also criticised Elliott’s process for selecting some of its nominees, saying the activist had sought to put forward four candidates without first holding discussions with the company. The miner described that approach as inconsistent with appropriate board governance.
The confrontation comes as Northern Star’s shares have weakened in recent months. The stock closed 0.4% higher at AUD23.04 in Sydney on 13 August, giving the company a market value of about AUD32.8bn. The shares remain 5.4% lower over the past six months, alongside a decline in the gold price.
