Xstrata chairman quits over bonuses veto as Glencore tie-up agreed

 

Sir John Bond dramatically 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 0.5 per cent shareholder Royal London Asset Management, said: "We would have expected resignations. The retention package overcomplicated the whole deal and Xstrata initially failed to negotiate the best deal it could for its shareholders, even though it said the original offer was the best it could have negotiated."

In a further embarrassment for Sir John, in September Glencore raised the offer he had enthusiastically agreed on behalf of Xstrata in February, after a barrage of opposition from shareholders such as Qatar, which has a 12 per cent stake. Glencore originally offered Xstrata investors 2.8 of its shares for each one of theirs, but increased the ratio to 3.05.

The new deal also saw Sir John perform a further climbdown, as he dropped the bonuses as a condition for consummating the deal.

Xstrata and Glencore now need clearance from regulators. European competition regulators are due to announce by Thursday whether they will clear the deal, potentially with divestments, or begin a longer inquiry. It is thought to be looking most closely at the European zinc market, where the companies have a 50 per cent share. South Africa and China also need to clear the deal, although neither country has given a deadline.

If concluded, the merger would create a mining and commodities trader that encompasses Xstrata's coal, nickel, zinc and copper mines and Glencore's cotton-to-oil trading empire. In yesterday's complex three-part shareholder ballot, 78.8 per cent of Xstrata investors voted to approve the merger without the retention bonuses, while a motion backing the merger with the bonuses – which needed 75 per cent approval – only secured 68 per cent. The final vote, on just the retention bonuses, was rejected, leaving the deal approved but without the payouts.

Xstrata's shares added 29.8p to 986.6p while Glencore's increased by 5.15p to 331.75p.

Rocky road: How mega-deal was carved out

7 February Glencore and Xstrata agree an all-share merger to create a commodities powerhouse, offering 2.8 Glencore shares for every Xstrata one.

9 April Qatar's sovereign wealth fund starts building up it stake in Xstrata, initially past 5 per cent then past 10 per cent in June.

31 May The companies detail the deal, including a retention package worth millions for Xstrata's chief executive, Mick Davis, and other key managers. He was to stay on as chief executive of the new group, with Glencore's CEO, Ivan Glasenberg, as deputy chief executive.

26 June Qatar demands better terms, asking for 3.25 new Glencore shares for every Xstrata share.

7 September After late-night talks that end just hours before shareholders are to vote on the deal, Glencore raises its offer to 3.05 shares. Mr Davis will now leave, and Mr Glasenberg will head the group.

15 November Qatar says it will vote for the takeover but will abstain from voting on the multimillion-pound management retention plan.

20 November Investors pass the deal but vote down the pay plan.

News
The cartoon produced by Bruce MacKinnon for the Halifax Chronicle-Herald on Thursday, showing the bronze soldiers of the war memorial in Ottawa welcoming Corporal Cirillo into their midst
news
News
peopleFox presenter gives her less than favourable view of women in politics
Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into disastrous conflicts
News
The Edge and his wife, Morleigh Steinberg, at the Academy Awards in 2014
peopleGuitarist faces protests over plan to build mansions in Malibu
PROMOTED VIDEO
Property
One bedroom terraced house for sale, Richmond Avenue, Islington, London N1. On with Winkworths for £275,000.
property
Voices
Nigel Farage has backed DJ Mike Read's new Ukip song
voicesNigel Farage: Where is the Left’s outrage over the sexual abuse of girls in the North of England?
News
i100
News
news

Emergency call 'started off dumb, but got pretty serious'

Arts and Entertainment
Taylor Swift performs at the 2014 iHeart Radio Music Festival
musicReview: 1989's songs attempt to encapsulate dramatic emotional change in a few striking lines
News
Mario Balotelli has been accused of 'threateningly' telling a woman to stop photographing his Ferrari
peoplePolice investigate claim Balotelli acted 'threateningly' towards a woman photographing his Ferrari
Arts and Entertainment
Paul Anderson plays Arthur Shelby in Peaky Blinders series two
tvReview: Arthur Shelby Jr seems to be losing his mind as his younger brother lets him run riot in London
News
ebooksAn unforgettable anthology of contemporary reportage
Voices
Don’t try this at home: DIY has now fallen out of favour
voicesNick Harding, who never did know his awl from his elbow, is glad to see the back of it
Arts and Entertainment
Miranda Hart has called time on her award-winning BBC sitcom, Miranda
tv
Sport
Phil Jones (left) attempts to stop the progress of West Bromwich Albion’s James Morrison on Monday
I'm not worried about United's defence - Chelsea test can be the making of Jones and Rojo
Arts and Entertainment
Saw point: Bradley Cooper and Jennifer Lawrence in ‘Serena’
filmReview: Serena is a strangely dour and downbeat affair
Life and Style
The Zinger Double Down King, which is a bun-less burger released in Korea
food + drinkKFC unveils breadless meat beast
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

Markit EDM (CADIS) Developer

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

SQL Developer with T-SQL, Watford, Hertfordshire - £350 - £360

£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...

Chief Financial Officer

120-150k: Accountancy Action: We are looking for an experienced CFO from a min...

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

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

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?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker