CEO known as ‘Mick the Miner’ pockets cash payments and share options after group’s takeover by trader Glencore
Mick Davis, the departing chief executive of Xstrata, is to walk away from the mining firm after banking almost £75m as a result of the group’s takeover by commodity trader Glencore, which finally approved on Tuesday.
Cash payments – which include an extra £4.6m on top of a previously announced payoff of £9.6m – are to be made to Davis as he is to leave the company immediately after the deal is completed next month, instead of working for the combined group for a further six months. Davis also owns share options worth about £34m, that will be cashed in on his departure, which come on top of the shares worth more than £26m that he sold in December.
In addition, the executive known within the industry as “Mick the Miner” will be given personal access to 30 hours in Xstrata’s corporate jet until the end of June and be allowed to sublet Xstrata’s Mayfair head office until March 2017 – with almost a year handed to him rent-free. The offices are almost certainly to be used to launch Davis’s next business, which is widely expected to once again be in the natural resources sector.
Davis departs along with a string of senior Xstrata managers, which effectively seals the Glencore takeover of the company despite efforts by both sides to portray it as a “merger of equals”. The combined group will now be run by the commodity trader’s billionaire chief executive, Ivan Glasenberg, who floated Glencore two years ago – partly in an effort to acquire Xstrata and other major miners.
One major Xstrata shareholder said: “This is a huge amount of money, but in Ivan’s mind it is pocket money. [The Xstrata departures] are no surprise. During the negotiations for the deal, Ivan couldn’t wait to get hold of this company. That is why it was always obvious they should have been paying a premium to gain control.”
The takeover, which was announced in February 2012, was finally secured after a string of setbacks, including rows over Davis’s proposed pay when he was to lead the combined company, arguments over the price being offered to Xstrata investors and competition concerns.
On Tuesday China’s antitrust authorities removed the last remaining obstacle to the $30bn (£20bn) takeover after Glencore agreed to sell a $5.2bn mining project to ease its grip on copper.
Xstrata’s Las Bambas mine in Peru had been expected to be sacrificed to secure the approval of China’s ministry of commerce, but Glencore also agreed eight-year commitments covering the supply of copper, zinc and lead to China.
Industry observers said that Chinese regulators have rarely demanded asset sales to improve competition after a major tie-up, but the importance of the metals that Glencore mines and trades for China’s economy meant the merger was unlikely to go through without changes.
Elsewhere, it was announced that Xstrata’s chief financial officer, Trevor Reid, who was to take the same role at Glencore Xstrata, is also to leave the company. The chief executives of the copper, nickel and alloy businesses – Charlie Sartain, Ian Pearce, and Loutjie Smit – will also depart, as will executive general manager Thras Moraitis, and chief legal counsel Benny Levene.
Glencore Xstrata is also searching for a new chairman, after Sir John Bond of Xstrata decided not to take up the role following widespread investor dismay at how he had conducted the sale process.
Tony Hayward, the former chief executive of BP who leads Glencore’s nominations committee, is believed to be leading the search for a replacement and has promised shareholders that they will have a chance to comment on the favoured candidates.
Shares in Xstrata gained 2.5% to close at 986p. Glencore shares added 1.25% to close at 325.1p.