James Moore: Qataris are right to stand back from voting for these Xstrata retention deals

Outlook Thanks to the Qataris, Glencore boss Ivan Glasenberg's protracted quest to win control of Xstrata is now all but over. The oil-rich state's sovereign wealth fund will likely carry the day for him because, even though the structure of this mining mega-merger means that only 16 per cent of Xstrata shareholders saying "no" could kill it, there isn't enough stomach among the rest to torpedo it now the big dog is laying at Mr Glasenberg's feet.

At Mr Glasenberg's feet, but not at Xstrata's. There's a sting in this dog's tail.

Here's why. It has repeatedly been said that the benefits of this deal to Xstrata's shareholders are debatable. With an enviable portfolio of assets in excellent situations, Xstrata isn't short of prospects or profits ($8.15bn (£5.13bn) pre-tax last year).

Despite this, there is no argument whatsoever about the benefits of the deal to Xstrata's managers. The top 70 stand to divvy up £140m for doing little more than staying in their jobs as a result of the retention packages agreed by Xstrata's bosses.

But with the deal under threat, Xstrata has been forced to offer shareholders a bonus too in the form of a vote on the bonuses for its management. The Qataris sprang a surprise by abstaining.

Make no mistake, this is a real snub to Xstrata's chairman, Sir John Bond, and his fellow directors. With most of the voting advisory services urging shareholders to go one step further and vote it down, the retention packages may now fall away.

We shouldn't cheer too loudly. The statement issued by Qatar Holding explaining its decision rather misses the point. The investor said it was "conscious of the sensitivities concerning governance issues in the UK and does not feel it appropriate to influence the outcome either way".

However, it nonetheless affirmed that it "strongly believes that retaining Xstrata's operational management is of critical importance to the successful and stable integration of the two companies, the completion of key projects within agreed timescales and to maximising the benefits of the merger".

Which ignores the fact that retention packages are illogical and bad for business. If a rival wants one of the men or women whom Xstrata says are so valuable, standard practice is to simply buy out their retention deal so they don't lose out by changing employer. And then hand them a fresh retention package (which may in turn be bought out by another employer).

Still, if the Qataris' abstention leads to the packages being voted down it will be a victory of sorts for the governance lobby. And thus (in the long term) it will be a victory for investors who will ultimately benefit from companies that are run better. The Qataris included.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Training/Learning and Development Coordinator -London

£28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

Training Programme Manager (Learning and Development)-London

£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

.NET Software Developer (.NET, C#, ASP.NET, front-end)

£30000 - £45000 per annum: Harrington Starr: A Global Financial Service Organi...

C# Web developer (C#,MVC,ASP.NET,SQL)

£30000 - £40000 per annum + Bonus+Benefits+Package: Harrington Starr: C# Web d...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried