Mick Davis, the chief executive of the coal miner Xstrata, is to leave with a £14.2m pay-off and continued use of the company's private jet, as its proposed merger with the commodities giant Glencore received the green light from a crucial regulator.
China's Ministry of Commerce has approved the £35bn deal, which means the long-running merger between the two FTSE 100 companies has cleared its final hurdle and should be completed next month. China's endorsement of mining's biggest merger is subject only to the enlarged group selling its assets in Peru's Las Bambas copper mine within three months, which Glencore has agreed to.
The two companies had been waiting for the Ministry of Commerce to rubber-stamp the deal and Glencore had said it expected to complete the takeover by 2 May if the Chinese gave it their blessing this week.
Mr Davis was to have led the merged company for six months before handing over to his opposite number at Glencore, Ivan Glasenberg, who will now take charge from the start.
The Xstrata chief's pay-off comprises £9.6m for the ending of his contract and £4.6m for half a year's work, including salary, bonus and pension allowance. Mr Davis has agreed to work as a consultant to the combined group until 30 June to help ensure an orderly handover. He will not get a monthly fee but will be entitled to 30 hours' private use of an Xstrata aircraft.
He will also take a sublease on Xstrata's luxury pad in central London until May 2017 at the same rent as the company is currently paying, although this includes a rent-free period until next March.
A source close to negotiations conceded that Mr Davis's arrangement over the jet would have "raised some smiles" around the City, but suggested that under existing contractual terms he would have probably enjoyed that access after leaving Xstrata anyway.
On Mr Davis being given a sub-lease on the office, the source added: "Glencore has no use for that London office, so it would have been a vacant office space liability on their balance sheet. To sub-let it to Mick is a sensible commercial arrangement."
Glencore had been hoping to avoid an exodus of staff from Xstrata but it emerged today that other senior executives are heading for the exit. Some of these will also stay on for six months to help with the handover.
Charlie Sartain, Xstrata's copper chief, Ian Pearce, its head of nickel, and Loutjie Smit, the interim boss of alloys, are all leaving with undisclosed pay-offs. Confirming previous speculation, Xstrata's finance director, Trevor Reid, is also stepping down, as is its head of strategy, Thras Moraitis. In March, it emerged that Mr Glasenberg is in line for the biggest windfall: his 1.09 billion shares are set to yield $173m (£113m) in dividend income after the group announced a 5 per cent increase in investor payouts to 15.75 cents a share for the year.
Shares in the merged company are expected to start trading on 3 May once the scheme of arrangement, approved by shareholders in both companies, is cleared by a UK court.
Glencore shares rose 4p to 325.1p while Xstrata gained 19.7p to 986p.Reuse content