ABI pay alarm clouds Glencore-Xstrata merger plan

The proposed £57bn mega-merger of the mining and commodity giants Glencore and Xstrata was dealt a further blow yesterday as a key shareholder body condemned the companies' plan to pay key executives £170m just to keep them at the combined group if the deal goes through.

The Association of British Insurers made its contempt known by issuing a rare red-top alert on the retention payments, a core part of the deal that would see Xstrata's chief executive, Mick Davis, receive £29m for running the company for three years after the merger is finalised, irrespective of its performance.

The red top represents ABI's highest level of concern about an issue facing the shareholders it represents. ABI's head of corporate governance, Andrew Ninian, said: "The ABI is always sceptical about the effectiveness of retention payments."