BILLINGS – The struggle over Montana’s largest publicly traded company has turned increasingly bitter ahead of a May 2 shareholders’ vote, as former Gov. Brian Schweitzer and a team of dissident investors spar with Stillwater Mining executives for control of the $1.3 billion enterprise.

The stakes for Schweitzer are high – and complicated by his consideration of a run to replace fellow Democrat U.S. Sen. Max Baucus. Baucus announced Tuesday that he will step down in 2014 after six terms. Political analysts count Schweitzer as an early front-runner should he jump into the race.

A victory on Stillwater would allow Schweitzer to launch a Senate campaign on a high note. Defeat could tarnish his much-touted business credentials.

The fight over the company has featured dueling campaigns to sway public opinion and brought sharp personal attacks from both sides. The fracas forced Stillwater Chairman and Chief Executive Officer Frank McAllister to return $2.3 million worth of company shares this month, following a shareholder’s lawsuit that charged the stock awards were excessive.

Stillwater was formed in 1994 and employs more than 1,600 people at two platinum and palladium mines in the Beartooth Mountains and a precious metals recycling plant in Columbus.

In February, coming off an eight-year stint in the governor’s mansion, Schweitzer teamed up with a New York hedge fund, the Clinton Group, in a bid to topple the company’s board.

They allege mismanagement has depressed Stillwater’s share price, and characterize McAllister as an absent CEO whose costly but so-far unsuccessful pursuit of new mines in Canada and Argentina have put Montana jobs at risk.

McAllister has been at Stillwater’s helm for 12 years but lives primarily in his birthplace of Mesquite, Nev.


Schweitzer bought 29,000 shares in Stillwater in recent months, now worth about $334,000. The former governor – with a personality equal parts flamboyant and folksy – headlines a slate of new directors offered by Clinton Group. He would have to step down if he became a senator.

“I’ve put my shoulder into saving these mines and I’m going to see it through,” Schweitzer said in an interview. “Hypothetically, if I did run, I wouldn’t be installed until January 2015 and this would be six or seven quarters that I would be a director. If we can’t make this company more efficient, if we can’t put the focus back on Montana in six quarters, then we will have failed like their board of directors.”

McAllister points out that Schweitzer had special praise for the CEO during his 2011 State of the State address to the Montana Legislature. As the company aims to increase platinum and palladium production with pending mine expansions, he says its finances are solid and its growth prospects promising.

“They are not miners. They are opportunists,” McAllister said of Schweitzer and the Clinton Group. “We’re going to have a higher share price, and these guys see that and on the cheap they want to take control of a company as well-positioned as we are.”

Stillwater shares are down by 68 percent since McAllister came on in 2001.

The stock tracks closely with palladium and platinum prices. But it has yet to recover from a 19 percent drop on July 11, 2011, when Stillwater announced it was spending $450 million in cash and stock on a vast, undeveloped copper reserve in Argentina.

McAllister proclaimed then he was transforming Stillwater into an international mining company; he now emphasizes the Montana mine expansions.


Filings with federal regulators show Stillwater expects to spend $1.25 million to fend off the takeover, more than double the $500,000 the Clinton group said it would spend. Some Wall Street analysts have lined up behind the McAllister-led board, saying the takeover bid either won’t succeed or is irrelevant to the company’s growth potential.

Also backing the current management are the union representing Stillwater’s workers and local conservationists who worked with McAllister to reduce the company’s water pollution.

Heading into Thursday’s annual meeting, when shareholder votes will be tallied, Schweitzer’s side boasts backing from two influential investor research firms, ISS and Glass, Lewis and Co. The firms hold considerable sway over large institutional investors that rely on their recommendations during shareholder votes. Both slammed the current management and board over the Argentina project and McAllister’s paycheck.

The CEO earned almost $5 million last year in salary, stock and other compensation. That’s risen sharply in the last several years and is more than twice what his peers made at other companies, according to Glass Lewis.

Still, Schweitzer’s side has been forced to defend itself from Stillwater’s counterattacks. Those prompted one nominee to withdraw after the company found inconsistencies in the academic credentials listed in his biography.

Another dissident nominee, Stillwater’s founding CEO, Charles Engles, has been the subject of vague accusations he abruptly resigned in 1997 under questionable circumstances following an “internal investigation.”

McAllister and the company have not given further details, citing employee confidentiality. Several of Engles’ former co-workers refute that he left under duress and ISS rejected the matter as “deeply disingenuous ... innuendo.”

Engles, whose name has been floated as a possible interim replacement for McAllister, said he could not discuss his departure. He rejected any insinuation of wrongdoing: “There was no scandal or anything of the sort,” he said.

All the maneuvering for shareholder votes may turn out to be merely a warm-up for Schweitzer, who said he’ll survey the political landscape and decide on a Senate run once the Stillwater vote is behind him.

“I always thought he wasn’t done with public life,” said Craig Wilson, a political analyst at Montana State University-Billings. “Knowing Schweitzer and his personality, it’s got to be a lot more exciting to be a U.S. senator than directing a platinum and palladium mine.”

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(3) comments

Run - A- Mook
Run - A- Mook

Former Gov. Schweitzer and former President Clinton have two things
in common, They both had a Republican House and Senate, to hold
their left-leaning feet to the fire. With a demoRAT house and senate, we
would have had Hillarycare instead of obummercare. God knows what
we would have here in Montana.


First and upmost, Schweitzer is a loyal stooge and toadie for Obama. He would vote the way his master instructs him to vote in the Senate. Secondly, maybe, he should stay home and take care of business first.


WOW! The unions and enviromentalist are opposed to Schweitzer's take over. If he runs for office he'll be asking for their vote. Stay tuned!

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