THE chief executive of Xstrata is set to line up a major retention bonus when a circular explaining the miner’s $90bn (£57bn) merger with Glencore is published this week.
Mick Davis is expected to be allocated a retention bonus worth tens of millions of dollars if he stays with the enlarged group for three years.
There are said to be no performance tests attached to the payment, which could ignite the fury of institutional investors. Almost four in ten shareholders failed to support Xstrata’s pay plan at the annual meeting earlier this month.
Davis is due to become chief executive of the combined group while Ivan Glasenberg, his counterpart at commodities giant Glencore, will serve as his deputy.
The documents for shareholders, which are being published a month later than planned after talks with regulators, are seen as the last chance to mount a charm offensive before a vote in July.
There is unlikely to be an improvement on the all-share offer made to Xstrata investors, however. This is because of technical changes set to support Glencore shares over the coming weeks, share sales by prominent skeptics and stake-building by Qatar, whose sovereign wealth fund now has more than nine per cent of Xstrata and is expected to back the deal.
Glencore, which already owns almost 34 per cent of the miner, is offering 2.8 new shares for every Xstrata share held to seal its long-standing plan to create an integrated mining and trading powerhouse.
Those terms are likely to be confirmed in the documents, due out by Thursday, although Glencore can still increase the bid up until a few days before shareholders vote.
“Qatar seems reasonably likely to approve the 2.8 ratio. So given that, the chances of an increase in the ratio from 2.8 to something modestly above have probably lessened slightly, and the probability the deal will get done has increased,” said Nik Stanojevic, an analyst at Brewin Dolphin.
Xstrata declined to comment ahead of the publication of the documents.