LONDON, UK – The chief executive of Xstrata, Mick Davis, has been offered almost £29 million ($45 million) to remain as boss once the mining firm’s proposed merger with commodity trader Glencore is completed, in a move that has provoked the ire of top Xstrata shareholders.
Glencore, the world’s biggest commodities trading company, agreed in February to buy Xstrata in a “merger of equals” in order to create a new firm – Glencore Xstrata International PLC – with a market value of almost $90 billion, representing one of the largest ever all-share transactions in the mining sector.
According to new merger documents sent to shareholders, Davis will receive £9.6 million ($14.8 million) in “retention payments” for each of the next three years, to be paid as two-thirds cash and one-third Glencore share options once shareholder approval has been secured, the BBC reports.
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Glencore, based in Baar, Switzerland, trades metals, crops and fuels in the financial market, while the Zug, Switzerland-based Xstrata owns vast coal, copper and nickel reserves across Africa, central Asia and South America.
Glencore already owns a third of Xstrata, and the deal for the remaining stake is valued at almost $62 billion. According to The Daily Telegraph, £144 million ($222 million) will be distributed among 72 Xstrata executives besides Davis to entice them to stay on for another two years.
Shareholders representing almost 12 percent of Xstrata told The Financial Times that they were not happy with Davis’ package, and attacked the complete absence of performance targets therein.
The retention pay arrangements are to be put to a vote on July 12, and if Xstrata investors decide not to accept them the Xstrata-Glencore merger will collapse.
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