However, shareholders balked at a £140m retention package for Xstrata’s senior management, claiming that ‘golden handcuff’s were unnecessary for a merger. A proposal to go ahead with the merger with the bonuses failed to reach the 75% threshold; while the merger alone was voted through with 77.88% of yes votes.
Shareholders may have wished to avoid turning the merger into a Glencore turnover (and save a few bob) but their decision may cost the new company dear. Xstrata chief executive Mick Davis warned that voting down the staff pay-outs would ‘introduce unnecessary risks to the merged company’s future value proposition’ (i.e. top people will leave) – and he didn’t have to wait long to be proved right. Xstrata chairman Sir John Bond has told the board that he is to resign.
‘In the light of shareholders’ decision not to support the board’s recommendation, I have informed the Xstrata plc board and Glencore’s current chairman that, once the merger has completed … I will step down,’ he said.
Sir John, who held senior board roles at Vodafone and HSBC before taking the helm at Xstrata, has only been in the job for a year and a half. He will now begin hunting for own his replacement. In the meantime, the heat is on Glencore’s Ivan Glasenberg, who takes charge of the newly-formed Glencore Xstrata plc (not the most imaginative name but it's better than some post-merger efforts - isn't it, EE). And there is still one more hurdle to leap: competition regulators in Brussels are to give their verdict on whether the deal needs further investigation on Thursday.
If Glasenberg gets the nod, Glencore Xstrata will be the biggest player in copper, coal, nickel and zinc extraction and trading in the world. Let’s just hope Glasenberg can keep this giant on a leash…