Ousted Cliffs CEO to receive US$11M payment

Struggling iron ore and coal miner Cliffs (NYSE: CLF) will have to make close to $28 million in severance payments to executives and other key staff that have been turfed following a proxy battle.

Activist hedge fund Casablanca Capital succeeded in gaining control of Cliffs’ board at the company’s annual meeting in late July. Six of the 11 board members elected were nominated by Casablanca, a minority shareholder with a 5.2% interest in Cliffs.

The nominees included Lourenco Goncalves, who has taken over as the company’s new chairman, president and CEO from Gary Halverson. Although Halverson was only instated as CEO in February after joining the company as president and chief operating officer in November 2013, he is entitled to $11 million in severance under change of control provisions in the company’s previously adopted incentive equity plan.

Over the next two years, the miner could also be liable for up to $40 million in additional “double-trigger” payments based on its current share price. However, the company says it expects triggering events – and therefore actual payments – will be minimal.

Read the complete article at NorthernMiner.com/news/ousted