Qatari investors give blessing to mega merger

SOVEREIGN wealth fund Qatar Holding has likely scuppered management incentive arrangements for key Xstrata staff, as it confirmed yesterday that it would back the mega-merger with Glencore but abstain from voting on controversial remuneration plans.

Xstrata’s second-largest shareholder after Glencore said yesterday it would vote in favour of two key resolutions at Tuesday’s shareholder vote, which will pave the way for the £56bn deal to go ahead.

Under a complex voting structure announced last month, Xstrata shareholders will be able to vote in support of the deal, but object to the retention plan for key managers.

The Qatari sovereign wealth fund said it would abstain from voting on the management incentive arrangements as it felt it inappropriate to influence governance issues in the UK. It means its voting share of around 25 per cent will be removed from the vote, which sources close to the transaction say will make it difficult for the management incentive plans to be green-lit. If the remuneration plans are not voted through, it is understood around 70 senior managers at Xstrata could take flight.

Both Xstrata and Glencore have previously spoken out in support of the management incentives. In the new scheme document last month, directors of both commodity companies said they believed that the retention of key Xstrata senior management was “critical for the future success of the combined group and to ensure the transaction is completed as a merger of equals”.

Tuesday’s shareholder vote – which comes 10 months after commodities giant Glencore first approached Xstrata – will see Xstrata shareholders vote on the deal, which was sweetened in September to 3.05 new shares for every Xstrata share. Investors Scottish Widows Investment Partnership and Standard Life Investments have so far spoken out in favour of the deal, although SLI has criticised the magement incentive arrangements.