Anger at pay deal for Xstrata chief

Two of Xstrata’s top 10 shareholders lashed out yesterday at the miner’s “excessive” plans to pay a $46m retention package to its CEO, threatening its big-ticket takeover by Glencore.

Mick Davis is slated to receive a three-year retention deal worth almost £30m if Xstrata’s $30bn takeover by the commodities trader proceeds.

Initial surprise at the size of the so-called ‘golden handcuffs’ unveiled on Thursday has quickly evolved into anger, with several minority shareholders claiming that the incentives offered to Davis and a slew of other executives were a direct attack on the principles of good corporate governance.

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David Cumming, Standard Life Investments’s Head of Equities, said the proposed salaries and “excessive retention payments” lacked any performance requirement and were “unacceptable and depressing”.

“This document makes supporting Glencore’s already inadequate offer for Xstrata even less palatable. Consequently, we still believe it should be opposed,” he added.

Fellow top investor Fidelity Worldwide Investment echoed SLI’s negative standpoint.

“The terms of the pay arrangements associated with the merger of Glencore and Xstrata are provocative and insensitive given the current climate,” said Dominic Rossi, Global CIO Equities, Fidelity Worldwide Investment.

“In effect, the interests of management have been placed ahead of those of shareholders.”

A third investor, speaking on condition of anonymity, said: “This goes against every corporate governance principle.”