OREANDA-NEWS. October 05, 2010. UC RUSAL (SEHK: 486, EuroNext: RUSAL/RUAL), the world’s largest aluminium producer and owner of a 25% stake in MMC Norilsk Nickel (“Norilsk Nickel”), announces  that ISS Proxy Advisory Services (“ISS”), a leading independent institutional proxy advisory service, recommends that shareholders of Norilsk Nickel vote FOR the proposal to approve the early termination of the powers of the Norilsk Nickel Board of Directors and FOR two independent director nominees at the Extraordinary General Meeting of shareholders (“EGM”) to be held on 21 October 2010.

In its report released 30 September 2010, ISS expressed concern over the influence exerted by one large shareholder, Interros Holding Co. (“Interros”): “Norilsk Nickel's board is currently controlled by Interros, which controls 46.2 percent of the board while holding a 25-percent stake in the company. Such a high influence is of concern. Moreover, if company management does indeed collude with Interros, this influence grows to eight directors, or 61.5 percent of the board.”

“The possibility of collusion between company management and Interros is a potentially troubling development, given that taken together they control a majority of the board,” continued ISS. “We, therefore, believe that change is warranted on this board and that the best solution to this situation would be to terminate the current unbalanced board and to elect new directors.”

ISS therefore noted that it recommends voting FOR RUSAL’s proposal to approve early termination of the powers of the Norilsk Nickel Board of Directors at the EGM.

With respect to the nominees proposed to Norilsk Nickel’s board, ISS stressed the importance of electing independent directors: “Considering the current unhealthy dynamics at Norilsk Nickel's board and the shift of power toward one of the two significant shareholders, it is imperative that independent directors be present on this board. At present, there are only two independents on the company board, which does not reflect Norilsk Nickel's ownership structure.  Ideally, the number of independents would increase in order to bring the much needed objectivity to this board.”

Of the four proposed nominees that may be considered fully independent under ISS’ definition, ISS explained that Rusal’s nominee, Terence Wilkinson, “has relevant mining experience, and is familiar with the specifics of the Russian market.” ISS also stated that “[Mr.] Wilkinson would bring a fresh, outside viewpoint to the board.”

ISS further noted that another independent candidate, Gerard Holden, “has valuable finance and accounting experience, and is crucial in his role as the independent chairman of the company's audit committee. His set of skills makes him uniquely qualified to serve on the company's board of directors, especially given the current company situation and market conditions.”

ISS therefore noted that it recommends voting FOR Wilkinson and Holden for election to Norilsk Nickel’s board of directors.

Rusal’s other independent nominee is Professor Lucian Bebchuk, a professor at Harvard Law School whom ISS notes is “a renowned figure in corporate governance.” With respect to Professor Bebchuk’s nomination, ISS stated that “[u]nquestionably, Bebchuk could bring much-needed improvements in corporate governance practices if elected, and could make a positive addition to the company's board.”

Finally, as Rusal has stated for many months, ISS also noted in its report that the voting by Norilsk Nickel management of 8.5% of the company’s shares at the June 2010 shareholder meeting “stands in contrast to the spirit of [Russian] law. This is a negative practice from a corporate governance standpoint, as it allows company management (which oversaw how the shares were voted) to exert direct control over the board, thus violating the principle that the board should oversee the activities of company management.”

Rusal supports ISS’s conclusion that “change is warranted on this board and that the best solution to this situation would be to terminate the current unbalanced board and to elect new directors.” We look forward to working with minority investors in Norilsk Nickel to further develop a balanced board and substantially increase the value of Norilsk Nickel for all of its shareholders.