Pelham Investment Partners LP Issues Letter to Shareholders and Files Proxy Circular to Reconstitute the Board of Nickel 28 Capital Corp.
- It is Time for Change at Nickel 28 -
- Management has enriched themselves at shareholders' expense while turning a blind eye to their own serious and long-standing governance failures.
- Management's recent actions reveal the Board to be an entrenched group, which is, contrary to their own disclosures, comprised of a majority of non-independent directors and whose acts threaten to deprive shareholders of their right to choose who manages their company.
Pelham is proposing a team of respected, highly-qualified and independent professionals to stand for election to the Board, who have the right skills and experience to provide effective independent oversight of Management.- Shareholders are urged to vote "FOR" each of
Pelham 's director nominees and "WITHHOLD" votes on any Nickel 28 director nominees using only the YELLOW proxy ahead of the proxy voting deadline of June 7, 2023 at 9:00 p.m.(Eastern Time). Pelham 's letter to shareholders and information circular, as well as additional important information, is available at www.savenickel28.com.- Questions or need voting assistance? Shareholders with questions or who need voting assistance may contact Laurel Hill Advisory Group at 1-877-452-7184 (416-304-0211 outside
North America ) or by email at assistance@laurelhill.com.
As the largest shareholder of the Company, holding approximately
Rather than try to distract shareholders with baseless innuendo and insinuation as the Board has done, we present the facts and leave it to the Company's shareholders to decide whether the current Board should continue to steward their investment in Nickel 28. Our concerns are briefly summarized below, and are described in greater detail in our letter to shareholders and information circular (which we strongly recommend shareholders read before making a voting decision for the upcoming Meeting):
Nickel 28's directors and officers are enmeshed in a number of significant and compromising interlocking relationships across various companies which benefit them and harm shareholders. To date, these relationships appear to have flown under the radar – but no longer:
- As a result of one of these relationships (which, along with its problematic consequences, is described in much more detail in our letter to shareholders and information circular), director Phillip Williams is, contrary to the current Board's claims, NOT independent, yet, in addition to being put forward as the Company's "Lead Independent Director" he chairs Nickel 28's two-person Compensation Committee which has approved staggering compensation at substantial expense to the Company and its shareholders.
- Nickel 28 director Maurice Swan is also the Chairman of the Board and serves on the Compensation Committee of Carbon Streaming Corporation (NEO: NETZ) (OTCQB: OFSTF) (FSE: M2Q) ("CSC"). Nickel 28 President and director Justin Cochrane is also a director and the Chief Executive Officer of CSC, where both are provided excessive levels of compensation despite CSC's stock price falling roughly
75% in the less than two years since its listing. We believe that a properly advised Board should deem this a "material relationship", and that Mr. Swan should be considered a non-independent director of Nickel 28.
The current Board has also failed to meet basic standards of governance, including:
- With its December 8, 2021 stock based compensation grant, the Board violated the limits on its already generous stock-based compensation plan.
- The Board has seemingly back-dated its 2022 equity-based compensation grants from December 15th to December 7th to reduce the stated value of those grants in its disclosures to shareholders, which allowed them to claim that the grant value was less than it actually was, reducing reported compensation.
- For several years, and in violation of TSX-V listing requirements as well as the Company's own Board mandate, the Company had, at most, only one legally independent director and three non–independent directors. The Company's disclosure, including their recently issued management information circular for use in connection with the Meeting, is materially false in this regard, and the validity of any "independent determination" of the so-called "independent directors" of the Company on a range of matters – including historic compensation - is called into serious question.
Given the Company's poor governance track record it should come as no surprise that Management receives egregious levels of compensation, paid for with the Company's funds and at the direct expense of shareholders:
- Despite not directly operating any assets, Nickel 28 executives receive compensation in the 94th percentile when compared to peers,1 most of whom actively operate their assets;
- The Company also has three redundant layers of management:
- Craig Lennon (Head of
Asia Pacific at the Company), handles the day-to-day management of the Company's interest in the Ramu joint venture and the relevant relationships, as he has for many years and, as far as we can tell, he does so skillfully. - Despite Mr. Lennon managing the Company's interest in its only asset with active operations, the Company's President, Justin Cochrane – who works only part-time at the Company (due to the fact that Mr.
Cochrane is also the CEO of another public issuer) was paid nearly last year ($2.4 million on a full-time equivalent basis or almost six times the peer median CEO compensation) for no discernible incremental effort.$4.8 million - On top of having both someone to directly manage the Company's interest in its core asset and a President to oversee him, the Company also has an Executive Chairman – Anthony Milewski – who was paid roughly
last year (roughly 5 times the peer median compensation), despite the fact that, according to his own (currently public) Instagram account, he apparently spends the bulk of his time at luxurious vacation destinations2.$3.3 million - Conor Kearns, the Company's part-time CFO, was provided compensation valued at almost
last year (and well in excess of$700,000 in 2021). The CFO of Nickel 28's predecessor, Cobalt 27 Capital Corp. (which owned all of Nickel 28's assets, and much more), was paid less than$1 million in the last full year it was a public company.$150,000 - Nickel 28 directors are each paid approximately
a year to serve on a Board that, according to the Company's own management information circular, only had two full board meetings last year. To put this egregious compensation in context, the median compensation for directors of The Toronto-Dominion Bank ("TD") –$270,000 Canada 's second largest publicly traded institution, with assets nearly 12,500 times greater than Nickel 28 – was last year. Instead of two meetings, the board of directors of TD had sixteen full board meetings last year.$275,000
Under the current Board's stewardship, which has been plagued by self-interested decision-making, the market has routinely valued Nickel 28's stock at a dramatic discount to net-asset-values derived from the Board and Management's own disclosures. We estimate that the Company's shares have traded at an average of just
The current Board has made it clear they will not voluntarily undertake the changes to governance and compensation which are necessary to ensure that your Company succeeds. When confronted with these problems, both privately and publicly, the Board's reaction has been to undertake a concerted campaign of entrenchment. Entrenchment efforts to date include:
- After having ignored, for six months, our privately written concerns that the Board was not in compliance with its own Board mandate which requires at least three independent directors, the Board appointed Lance C. Frericks to the Board less than 48 hours after it became apparent that our criticism would become public. Mr. Frericks appears to have no public board experience or skills relevant to the Company's business. Despite our questions, the Company has not explained why and how he was chosen.
- The Board instituted a "poison pill" despite the fact that Management collectively owned enough stock to trigger the "poison pill". To make sure they wouldn't have to "eat their own cooking" management included grandfather provisions to ensure Management, as a group, wouldn't trigger the "pill".
- The Board set the record date for the Meeting one-day prior to the expiry of
Pelham 's tender offer in a transparent effort to hinder our ability to vote the shares we purchased in the tender offer. Normally, the Company holds its Meeting in the late summer but, this year, Management moved it up to mid-June and provided no prior notice of the record date. We believe the structuring of the Meeting was intended to impede our director recruitment and nomination efforts and hinder our ability to vote shares with which we could hold Management accountable. - The Board rejected, without any attempt at engagement, a settlement offer we made (our second formal private attempt at engagement which followed numerous public requests for engagement) that would have provided for the current Board members to retain two seats and have substantial discretion over the composition of the remainder of the Board. It is cynical and false for the Company to claim that a proxy contest was unavoidable inasmuch as we tried, on multiple occasions, to get the Board to address its glaring governance and compensation problems voluntarily.
- Concerned that hollow attacks wouldn't work, and in an affront to shareholder democracy, the Board is attempting to use a flimsy pretext to deny you the ability to even consider our alternative slate of highly-qualified and truly independent director nominees.
Pelham is addressing these legal shenanigans head-on and intends to vigorously defend the right of shareholders to have a say on who is elected to the Board. - To date, the Company and members of the Board have, together, hired several advisors to assist them in their efforts to avoid accountability. These include at least four law firms, a financial advisor, a "strategic shareholder advisor" and at least one "strategic communications advisor". All of these firms, who are working with an entrenched Board at the Company's expense, represent a waste of shareholder resources.
Contrary the current Board's false assertion,
To be clear, our truly independent director nominees will act with discipline as they methodically assess and steward the Company as the elected representatives of shareholders with both eyes clearly focused on protecting the interests of all shareholders.
If elected,
This vote is of critical importance to all of us as shareholders of the Company and it is up to shareholders to protect the value of their investment in Nickel 28. Next year, management will, through vesting of stock it has already awarded itself (for no cash consideration), gain ownership over approximately an additional
Our YELLOW form of proxy has been prepared as a "universal" proxy, meaning that all of our nominees, as well as the nominees of Management, are included as voting options. We determined to provide shareholders with a universal proxy as the practice of utilizing a universal proxy in a contested meeting is becoming increasingly recognized as a governance best practice. Even though Management was in possession of the identities of our nominees and was made aware that the Meeting would be contested by us, the Board chose not to provide for our nominees on their form of proxy (for reasons that should be readily apparent to shareholders). Accordingly, shareholders are able to vote for our nominees or Management's nominees (or any combination thereof), on the YELLOW Proxy ONLY.
Time is of the essence. In order to ensure your vote is counted at the Meeting, please ensure it is received prior to the proxy voting deadline of 9:00 p.m. (Eastern time) on June 7, 2023.
Even if you have already voted using a blue management proxy or voting instruction form, you have every right to change your vote and support the nomination of our nominees. A later-dated YELLOW form of proxy or voting instruction form automatically revokes any and all previously submitted forms of proxy or voting instruction forms.
For any questions or voting assistance, shareholders should contact Pelham LP's strategic shareholder communications advisor and proxy solicitation agent, Laurel Hill Advisory Group ("Laurel Hill") at 1-877-452-7184 (416-304-0211 outside
Pelham Investment Partners LP is private investment firm located in
This news release is issued in connection with a solicitation of proxies by or on behalf of
Proxies may be solicited by mail, facsimile, telephone, telegraph, internet, in person, by advertisements and by any other manner permitted by law.
No person is authorized to give information or to make any representations by or on behalf of
Except as otherwise disclosed in the Pelham Circular, neither
To the knowledge of Pelham LP, Nickel 28's head office is located at 155 University Avenue, Suite 1240,
Information disclosed in this news release may contain forward-looking information. All statements and information, other than statements of historical fact, included in this news release contain forward-looking information. Statements containing forward-looking information can be identified by the use of forward–looking words such as "will", "expect", "intend", "plan", "estimate", "anticipate", "believe" or "continue" or similar words and expressions or negative variations thereof. Statements containing forward–looking information in this news release include statements regarding activities, events or developments that
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1 Comparators: 18 Canadian reporting issuers in the mining sector (nine TSX-listed and nine TSX-V listed, with similar market cap and total assets to Nickel 28). |
2 Based on an analysis of the photos posted to the – currently public - account @anthony.milewski between January 25, 2022 and April 8, 2023 |
3 For this analysis we took the last to be disclosed of (i) the |
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SOURCE Pelham Investment Partners LP