Xstrata boss Mick Davis to get £29m to stay in charge of merged giant

Mick Davis's huge retention package revealed in Glencore deal prospectus may spark investor revolt

After months of speculation, the mining and commodity giants Xstrata and Glencore have finally revealed just how much they want to keep Mick Davis running the combined show following their merger – £28.8m.

That is the amount Xstrata's chief executive, Mr Davis, is being paid simply to stay as the head of the newly merged entity for three years if the £57bn deal is completed.

The company is paying out more than £170m in total to retain 73 key staff, with managers other than Mr Davis being offered two-year retention deals. The figures emerged as part of the prospectus detailing the merger that was sent to shareholders yesterday.

The sheer size of the payment will fuel speculation that the deal may fail to receive the shareholder backing it needs at the extraordinary meeting next month. "Details of the retention package may prove to be controversial amid heightened sensitivity over pay and performance... the deal has a realistic chance of failing," analysts from Jefferies Group said in a note.

But Xstrata insisted the payments are key to the success of the merger, which will create a mining and commodities powerhouse, rankingas the world's fourth biggest minerafter BHP Billiton, Rio Tinto andBrazil's Vale.

"These arrangements depend upon retaining the core senior management of Xstrata, given that more than 80 per cent 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," the company said.

Mr Davis is already one of the best-paid FTSE 100 chief executives, taking home $5.4m last year in salary, cash bonus and benefits. This excludes long-term incentives, deferred bonuses and retirement benefits.

Having led Xstrata for a decade, Mr Davis has transformed the company from a $500m coal miner to a diversified miner worth about £27bn, and is seen as a steady hand by his company's shareholders.

However, 40 per cent of investors failed to back Xstrata's remuneration report earlier this month, which could be a sign that investors are growing wary of Mr Davis' pay deals, despite the company's strong performance.

Relatively little opposition is needed to scupper the transaction. This is because Xstrata and Glencore have opted to implement the merger using a scheme of arrangement, which requires agreement from 75 per cent of shareholders rather than the usual 50 per cent. Furthermore, Glencore already owns 34 per cent of Xstrata and will be unable to vote its holding on the deal. As a result, only 16.4 per cent of Xstrata's shareholders need to vote against the deal to block it.

The prospectus yesterday confirmed that under the so-called merger of equals – which most view as a takeover of Xstrata by Glencore – Xstrata investors would receive 2.8 shares in Glencore for each of theirs in Xstrata. Glencore's chief executive, Ivan Glasenberg, will take up the role of deputy chief executive of Glenstrata.

It also reveals that the banks, lawyers and PR advisers working on the deal will receive $200m in fees.

News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
peopleReports that Brand could stand for Mayor on an 'anti-politics' ticket
News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
News
Voluminous silk drawers were worn by Queen Victoria
newsThe silk underwear is part of a growing trade in celebrity smalls
PROMOTED VIDEO
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Candidates with surnames that start with an A have an electoral advantage
newsVoters are biased towards names with letters near start of alphabet
Arts and Entertainment
Isis with Lord Grantham (Hugh Bonneville)
TV
Arts and Entertainment
Jay James
TVReview: Performances were stale and cheesier than a chunk of Blue Stilton left out for a month
News
ebooksAn unforgettable anthology of contemporary reportage
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

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?