Xstrata out to salvage £57bn merger with concessions on bosses' pay

 

Xstrata has bowed to pressure from angry shareholders over its proposed mining-commodities mega-merger with Glencore and significantly changed controversial plans to pay key executives £170m just to keep them at the combined group if the deal goes through.

As Xstrata unveiled the new-look retention packages yesterday, Glencore was in a meeting with Qatar's sovereign wealth fund, battling to save the deal, The Arab emirate, which owns 11 per cent of Xstrata, made a surprise public announcement on Tuesday night that the acquisition price was too low. Glencore is offering 2.8 of its shares for each Xstrata share, but the Qataris said 3.25 would be "more appropriate".

In a significant climbdown, Xstrata yesterday made two key changes to the so-called retention payments, which would have handed its chief executive Mick Davis £29m in cash to run the company for three years, irrespective of its performance. Xstrata and Glencore have made the £57bn deal contingent on the retention packages being voted through by its shareholders.

Under the revised terms, Xstrata pledged to make the payments in shares rather than cash, giving the top 73 executives a greater stake in the performance of the company following the merger.

Dangling a further carrot to shareholders, who have become extremely frustrated at what they see as blatant greed on the part of Xstrata, the company said it would now link the payments to performance.

For the executives to be eligible for the full £170m, the group must cut an extra $300m (£192m) of costs in the two years after the deal, which it plans to do by consolidating areas such as transport, distribution and catering.

These will be on top of the $450m of annual cost savings the companies believe they can make by combining their sales and marketing operations.

Sir John Bond, Xstrata's chairman, said the company was "sensitive to the perspective and concerns of our shareholders in the current environment and we have listened to the feedback we have received since publishing the merger documents."

However, early indications are that the changes to the retention packages may not be enough when shareholders come to vote on the deal on 12 July.

Schroders' head of UK equities, Richard Buxton, said: "Three cheers for the Qataris. We've said all along that the ratio was wrong so they've either now got to improve the terms or see this deal get voted down." .

Shareholders such as Schroders, Standard Life, and Fidelity have already condemned the retention payments.

Shares in Glencore fell 1.45 per cent to 298.3p yesterday while Xstrata gained 1.4 per cent to 796.6p.

Bribery case: Glencore guilty

If yesterday wasn't already eventful enough for Glencore, a Belgian court convicted a subsidiary of the commodities trader of bribing a European Union official in return for market sensitive information.

In the ruling Judge Pierre Hendrickx found subsidiary company Glencore Grain Rotterdam guilty of paying the mobile phone bills and laying on a French holiday to secure information about grain subsidies. He fined the unit €500,000. Meanwhile, Karel Brus, a former EU agriculture department official, was sentenced to 40 months in jail. Mr Brus accepted a holiday to the south of France in 2003, while Glencore also paid €20,000 worth of phone bills for him in 2002 and 2003.

On receiving the judgment Mr Brus, dressed in a crumpled grey jacket and a light shirt, bowed his head and stared at the floor.

A Glencore spokesman said: "We are considering our position".

The court also convicted some other companies and individuals, including the French agricultural cooperative Union Invivo, of providing or facilitating bribes. "The holiday offered by Glencore Grain Rotterdam to Karel Brus in the South of France in June 2003 was in relation to the obtaining of secret information.... The mobile telephone was at the same time an element to be used to facilitate the violation of professional secrets... and an advantage used to incite him to agree to commit these indescretions," said Judge Hendrickx.

PROMOTED VIDEO
News
Actor, model and now record breaker: Jiff the Pomeranian
Video
News
Down time: an employee of Google uses the slide to get to the canteen
businessHow bosses are inventing unusual ways of making us work harder
News
REX/Eye Candy
science
News
i100
Sport
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
Extras
indybest
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
tech
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
News
i100
News
In Eternal Sunshine of the Spotless Mind Jim Carrey and Kate Winslett medically erase each other from their memories
scienceTechnique successfully used to ‘reverse’ bad memories in rodents could be used on trauma victims
Arts and Entertainment
Singer Pixie Lott will take part in Strictly Come Dancing 2014, the BBC has confirmed
tv
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

C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

Trade Desk FIX Analyst - (FIX, SQL, Equities, Support)

£50000 - £60000 per annum + excellent benefits: Harrington Starr: An award-win...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?