JFC requests HBM executive compensationJaguar calls for HudBay board to provide transparency on executive compensation and the role of independent directors
TORONTO, Dec. 11 /CNW/ - Jaguar Financial Corporation ("Jaguar") (TSX:
JFC) today called for disclosure of executive compensation arrangements and
the process followed by independent directors of HudBay Minerals Inc.
("HudBay") (TSX: HBM) that resulted in the ill-advised proposed transaction
with Lundin Mining Corporation ("Lundin") (TSX:LUN).
As a shareholder of HudBay, Jaguar believes the serious mispricing of the
agreement with Lundin (the "Lundin Transaction") raises obvious questions
about the motivations of those responsible. It appears that neither Allen
Palmiere nor, more surprisingly, the independent directors of HudBay put the
best interests of HudBay shareholders first when considering the Lundin
Transaction.
The current Board of Directors appears to be complicit in Mr. Palmiere's
actions through a lack of independent oversight and proper corporate
governance. The HudBay Board has also not provided shareholders with basic
information about the compensation they, as stewards of HudBay, are paying Mr.
Palmiere. Further, the Board has provided no information about the process
followed by the independent directors Mr. M. Norman Anderson, Dr. Lloyd
Axworthy, Mr. John Bowles, Mr. Ronald Gagel, and Mr. R. Peter Gillin in
approving the value-destroying Lundin Transaction. Jaguar and other concerned
HudBay shareholders believe that the independent directors should address the
errors made in pursuing the Lundin Transaction by putting the matter before
HudBay shareholders for a vote.
Compensation Issues
HudBay's Board has chosen to disclose as little as possible to
shareholders related to Mr. Palmiere's compensation package. The management
information circular for HudBay, dated April 30, 2008, discloses the
compensation of senior officers only for 2007 and Mr. Palmiere was appointed
CEO in January 2008. As a result, shareholders do not know what Mr. Palmiere
will earn in the form of salary, change of control payments or a transaction
bonus. It is unlikely that there will be public disclosure of Mr. Palmiere's
compensation package for several more months because HudBay has so far refused
to have a shareholders' meeting to consider the Lundin Transaction.
It is possible that Mr. Palmiere may receive a substantial special
transaction bonus, as Colin Benner did for the sale of Skye Resources Inc.
("Skye") to HudBay. Mr. Benner, currently a director of both HudBay and
Lundin, earned total compensation of $6,923,000 resulting from the sale of
Skye. As well, shareholders should be aware that Mr. Palmiere has virtually no
equity interest in HudBay, and therefore his interests are not aligned with
those of shareholders.
"Shareholders are entitled to know what compensation Mr. Palmiere is
receiving for this transaction, what he will receive on the termination of his
employment including any change of control compensation, and what he expects
to be paid as CEO of the combined company. He should be accountable to HudBay
shareholders," said Vic Alboini, Chairman and Chief Executive Officer of
Jaguar.
Role of the Independent Directors
Based on HudBay's public disclosure, the Special Committee of the HudBay
Board appears to have held only one meeting in the months leading up to the
signing of the Arrangement Agreement. No other information about the role of
the independent directors in the process that led to the proposed transaction
has been disclosed. Given the drastic effect of the Lundin Transaction, the
independent directors appear to have given it very little consideration.
"The reality is that unless a HudBay shareholders' meeting is held,
shareholders will not have the opportunity to review the background to this
transaction, evaluate the due diligence that was actually performed and assess
the process followed by the independent directors," added Mr. Alboini.
Concerned HudBay Shareholders
Jaguar has been contacted by various shareholders of HudBay expressing
their views about the Lundin Transaction and the need for a shareholder
meeting. Jaguar encourages all concerned shareholders of HudBay to e-mail
Jaguar at info@jaguarfinancial.ca or contact any of the following at Jaguar to
share their opinions: