The shakeup at Cleveland Cliffs is under way, with the recent resignation of its chief executive officer and on Friday with the angry resignation of an incumbent board member.
Cliffs Natural Resources may now be split up because hedge fund Casablanca Capital has managed to replace the company's board of directors with its own candidates at the company's annual shareholder meeting on July 29.CLEVELAND, Ohio --- Mining company Cliff Natural Resources on Friday said one of its directors Timothy Sullivan had resigned.
The company also announced Friday that it would pay former CEO Gary Halverson about $11 million under "change of ownership" rules the board adopted last year -- and that it would have to pay another $16.9 million to other executives who are leaving.
Cliffs hired Halverson last fall in a strategy to blunt some of the criticism leveled by hedge fund Casablanca Capital.
Sullivan was one of the company's five incumbent directors who survived the take over of Cliffs by Casablanca Capital, whose six candidates were elected by shareholders in July.
Sullivan, who joined the Cliffs' board just last year, cited differences with Lourenco Goncalves, the company's newly appointed chairman, president and CEO, after participating in one meeting of the newly constituted board.
"During the meeting, it was clear that neither you nor any of the new directors wanted to hear anything that might be contrary to your pre-scripted plan," he wrote in a resignation letter the company filed with the U.S. Securities and Exchange Commission.
"Prior to the telephonic board meeting last week, I was looking forward to continuing my service to the shareholders of Cliffs," the letter continued. "The desire was based on my intimate knowledge of the mining industry for over 38 years and of Cliffs as well as the reputation of some of the new incoming board members," he wrote.
"I can assure you that I have never experienced anything like what transpired in our initial board meeting," he wrote, concluding that he could not represent the shareholders "in light of the decisions and approach the new board of directors is taking."
Cliffs mines iron ore and coal used in steel making. It is one of the oldest companies in Cleveland but has fallen on hard times. Casablanca initially argued the company's operations should be separated but when rebuffed acquired about 5 percent of the outstanding shares and ultimately fielded its own slate of candidates to stand election by shareholders to the board of directors.