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Deripaska Gets $62M for Helping IPO

Deripaska at a news conference Monday. He will get 50.6 million shares for helping to push through the RusAl IPO. Kin Cheung

United Company RusAl said Wednesday that it awarded chief executive Oleg Deripaska, who controls 48 percent of the world’s largest aluminum maker, a stock bonus worth $62 million for helping it sell shares in Hong Kong.

Billionaire Deripaska was given 50.6 million shares, worth 481 million Hong Kong dollars based on Wednesday’s closing price, RusAl said in a statement. Senior management and employees were given about 6 million shares, the company said.

The basic annual pay for Deripaska, 42, is about five times more than the comparable compensation for the chief executive of BHP Billiton, the world’s largest mining company. RusAl’s shares are down about 12 percent since its January IPO, weighed down by concerns about debt of at least $12 billion.

“Investors will be fairly disappointed considering they are still underwater in their investment,” said Joseph Dayan, head of international sales and trading at Otkritie. “Investors don’t generally appreciate rewarding executives for IPOs, but for long-term operational accomplishments.”

RusAl rose 1 percent to close at 9.50 Hong Kong dollars ($1.22). The shares were offered at 10.80 Hong Kong dollars in the IPO.

The bonus stock was awarded after RusAl, the first Russian company to sell shares in Hong Kong, said this week that it swung back to a profit in 2009 and forecast rising demand. ? 

Troika Dialog raised RusAl to a “buy” from “hold” after the results. RusAl’s stock has lagged behind the gains of Norilsk Nickel — in which it owns a 25 percent stake —?  Troika said.

The bonus shares were given “for services provided in preparation of the global offering,” RusAl said. The stock will be subjected to a two-year lock-up period, it said. Deripaska can transfer 16.9 million of his bonus shares to a third party should that party agree to the same lock-up period, RusAl said.

BHP Billiton paid chief executive Marius Kloppers $10.4 million in the 2009 fiscal year, including a base salary of $2 million.

Lenders supported Deripaska’s pay package, which includes an annual base salary of $10 million, because they want to retain his services, Oleg Mukhamedshin, deputy chief executive officer of capital markets at RusAl, said Jan 11.

“This question of remuneration is generally not much of an issue in Hong Kong, as there’s little history of shareholder activism,” Francis Lun, general manager at Fulbright Securities, said in Hong Kong.

RusAl’s share offering was delayed at least twice by Hong Kong regulators over questions about its debt, and the company was barred from marketing the shares to retail investors.

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