Shareholder accuses Baja Mining of “culture of nepotism”

Mount Kellett Capital Management–the largest shareholder in Baja Mining (BAJ-T) with 19.9% of its shares–is criticizing the Vancouver-based junior for what it describes as a “prevailing culture of nepotism and preference at the company.” Baja is developing the Boleo polymetallic mine in Mexico.

The private investment firm with $6 billion in assets under management noted in a public statement on Jan. 10 that Kendra Low–the daughter of Baja Mining’s chief executive John Greenslade–continues to act as the company’s corporate secretary and is “one of the top five highest paid executives at the company.”

In the fiscal year ended 2010 Low’s total compensation amounted to $725,493, 1.3 million in cumulative option grants and entitlement to a payout of two years’ salary ($400,000) upon a change of control, Mount Kellett said.

Low’s total compensation in the fiscal year ended 2009 was $236,443 and $293,980 in the fiscal year ended 2008, according to a 2011 information circular.

The information circular noted that Low was completing a Masters in Business Administration from UBC (2011), held a Bachelor of Human Kinetics (honours) and a minor in commerce from UBC in 2002, and “has been involved with the company since inception in April 2004 and was Baja’s first employee.” Among her duties at Baja Mining is responsibility for the creation and regulation of the company’s corporate governance structures, policies, and mechanisms.

Greenslade did not return emailed requests for comment, nor did Mount Kellet’s managing director, Stephen Lehner. (Mount Kellett has nominated Lehner as one of two independent directors to Baja’s board along with Lorie Waisberg, claiming in a Jan. 9 press release that the addition of the two directors “will provide much needed independence in critical decision making.”)

In a press release on Jan 3, Baja Mining said it had appointed an independent chair to the board (Giles Baynham) and adopted several new policies relating to corporate governance. One of the additional policies stated that “no person who is a relative of or resides in the same home as a director or officer of Baja may act as a director or officer of Baja or its affiliates without prior approval by the independent directors. The policy is fully consistent with Baja’s long-standing practice.”

The changes did not satisfy Mount Kellett, however, which in its Jan. 9 press release argued that “while it is commendable that in response to our shareholder requisition, the Board of Baja has advanced limited corporate governance changes, the company continues to have a stock option plan which is not compliant with ISS (Institutional Shareholder Services) and the Board has yet to address a prevailing culture of nepotism and preference.” In a press release the following day Mount Kellett described Baja’s “policy pronouncements” as “window dressing.”

In an effort to meet some of Mount Kellett’s demands, Baja’s management said on Thursday it would amend its share option plans and approved Mount Kellett’s nomination of Lorie Waisberg to the company’s board of directors. But it rejected the appointment of Mount Kellett’s managing director Stephen Lehner, to its board, arguing that the company believes that to avoid conflicts of interest, “directors should not be current employees, senior officers or directors of institutional and corporate shareholders of their affiliates.”

As far as working with family members is concerned, a second daughter, Denby Greenslade, is employed at Catalyst Copper (CCY-V), where Greenslade acts as president, chief executive and director. An information circular from October 2011 lists Greenslade as corporate secretary and interim chief financial officer. She earned total compensation of $213,791 in the fiscal year ended May 31 2011 and $93,255 in the fiscal year ended May 31 2010.

According to Catalyst Copper’s website, Greenslade graduated from Simon Fraser University with a Bachelor of Arts in Communication and “has worked as a corporate secretary and director for several companies in the mining and IT industries and is constantly updating her business training.”