London, England — 01 June 2012 – Xstrata chief executive Mick Davis will get a three-year deal worth almost £30 million to stay at the helm once the mining giant joins forces with international trader Glencore “’ a windfall which is likely to sow a shareholder storm at votes due in July.
Reuters reports that in documents sent to investors yesterday detailing the terms of the long-awaited US$30 billion takeover bid by Glencore, Xstrata said it would pay retention deals to 73 of its key employees totalling more than £170 million.
All managers and senior executives, other than Davis, will be offered two-year packages to stay on after the all-share merger is completed, as Xstrata seeks to hold on to the operating expertise that built the miner up over a decade.
Davis, an industry veteran, is well respected as the architect behind Xstrata, a mining powerhouse built from the purchase of Glencore coal assets in 2002. The current plans have him remaining as chief executive of the combined group, with Glencore’s Ivan Glasenberg as deputy chief executive.
Yet the payments, particularly the sum offered to Davis “’ on top of an annual salary that already makes him one of the best-paid chief executives in the FTSE 100 “’ are fomenting discontent among some minority investors, as both Glencore and Xstrata prepare for a final charm offensive ahead of votes in July.
More than a third of voting shareholders rejected pay plans at Xstrata’s annual meeting earlier this month, amid a broader "shareholder spring" that has shaken up UK-listed companies with pay protests and claimed high-profile scalps.
Xstrata, however, warned its shareholders that the retention payments were ‘key’ to the success of the merger, and that it would be impossible to back the deal on July 12 without backing the windfalls to secure its key employees.
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