Sir John Bond resigned as chairman of Xstrata yesterday after investors backed the miner's proposed £56bn merger with Glencore but voted overwhelmingly to oppose £140m of retention bonuses he had sought to tie into the deal.
Sir John fell on his sword just half an hour after Xstrata revealed that 78 per cent of its shareholders had opposed the retention bonuses lined up for 70 of his staff, which he had insisted were key to the success of the enlarged group once the merger was completed.
Including abstentions, about 87 per cent of Xstrata's shareholders failed to back the controversial bonuses, which Sir John had initially said were so important that he made the deal contingent upon their approval. Furthermore, the original deal stipulated that the bonuses would not be linked to performance in any way, and were to be paid in cash.
In the first sign that the writing could be on the wall for Sir John, the former chairman of HSBC, the make-up of the bonuses was later switched to shares, and a performance-related element was introduced after a chorus of opposition from shareholders.
"In the light of shareholders' decision not to support the board's recommendation, I have informed the Xstrata board to commence an orderly process to appoint a new independent chairman of Glencore Xstrata," he said.
David Rough, Xstrata's deputy chairman and senior independent director, was also fighting for his job yesterday as the City put the entire board under the spotlight.
Tom Gidley-Kitchin, an analyst at Charles Stanley, said: "People are extremely disappointed in David Rough, and he is now in a difficult position." Jane Coffey, head of equities at shareholder Royal London said: "The retention package overcomplicated the whole deal."
European regulators are due to decide by tomorrow whether they will clear the deal, potentially with sell-offs, or begin a longer inquiry.