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.

Life and Style
Pepper, the 3ft 11in shiny box of circuits who can tell jokes and respond to human emotions
techDavid McNeill tests the mettle of one of the new generation of androids being developed in Tokyo
Life and Style
beauty
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
transfers
PROMOTED VIDEO
Sport
German supporters (left) and Argentina fans
world cup 2014Final gives England fans a choice between to old enemies
Arts and Entertainment
A still from the worldwide Dawn of the Planet of the Apes trailer debut
film
News
people
News
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Sport
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Sport
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight
tv
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
News
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
people
Arts and Entertainment
Balaban is indirectly responsible for the existence of Downton Abbey, having first discovered Julian Fellowes' talents as a screenwriter
tvCast members told to lose weight after snacking on set
Life and Style
More than half of young adults have engaged in 'unwanted but consensual sexting with a committed partner,' according to research
tech
Life and Style
A binge is classed as four or more alcoholic drinks for women and five or more for men, consumed over a roughly two-hour period
tech
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

BC2

£50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Programme Support, Coms, Bristol, £300-350p/d

£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...

(Junior) IT Systems Administrator / Infrastructure Analyst

£28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...

Finance Officer

Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice