Key staff at mining group Xstrata are to share in more than £240m as a result of takeover by Glencore
Key staff at mining group Xstrata are to share in more than £240m as a result of the £60bn takeover by Glencore – including the chief executive Mick Davis who stands to receive nearly £35m.
The payouts – some £170m of which are retention packages for 73 staff, including Davis – are the highest ever seen to secure staff during a takeover in the UK and are likely to rankle shareholders at a time of increased activism over top pay.
However, investors in Xstrata may feel unable to oppose the payments at a special vote on 12 July as the company has made the retention packages a condition upon the deal going ahead.
As it published long-delayed documents accompanying the transaction, Xstrata said the deal would “depend upon retaining the core senior management of Xstrata, given that more than 80% of the combined group’s income will be derived from its operating assets, and are the reason why the retentions were provided for as part of the transaction”.
“As a consequence the resolutions approving the scheme and the retention provisions are inter-conditional and, accordingly, the merger will not be implemented if the retention arrangements resolution is not approved,” the company said.
Swiss-based Glencore will hold a shareholder meeting on 11 July 2012 to approve the merger and change its name to Glencore Xstrata plc.
Davis will get £9.5m a year in 2013, 2014 and 2015 – some £28.5m – and while he has waived a contractual entitlement to another £9.5m, stands to receive £6m from long-term incentive plans that will pay out once the deal completes.
The documents contained no indication that the terms of the offer – under which Glencore is offered 2.8 of its shares for one in Xstrata – was being raised. Glencore, which listed on the stock market last year, already owns 34% of the mining company.