-- Glencore willing to accept Xstrata's retention package to keep CEO Mick Davis
-- Xstrata's board responsible for retention package terms; Glencore not involved
-- Glencore CEO says high pay needed to attract entrepreneurial leadership
By Alex MacDonald
LONDON---The chief executive of Glencore International PLC (GLEN.LN) said Thursday he was willing to accept the retention package of Xstrata PLC (XTA.LN) to keep its chief executive officer, Mick Davis, once the companies are combined.
However, Glencore CEO Ivan Glasenberg acknowledged shareholders aren't happy with the package.
"If this is a package that keeps him, then I have to accept it," Mr. Glasenberg, who is Glencore's largest shareholder, told journalists following his speech at the Melbourne Mining Club here.
He said Glencore had no input on the GBP173 million ($269 million) retention package that will be paid to 73 members of Xstrata's management if the merger closes. The decision on the size of the retention package was taken solely by Xstrata's board of directors, he added.
As part of the retention package, Mr. Davis is set to receive GBP28.8 million, or GBP9.6 billon annually, for remaining as CEO of the combined company for three years without any performance targets attached. Shareholders have baulked at the high retention package, with Standard Life calling it "unacceptable and depressing."
Shareholders of several U.K. listed companies have mounted protest votes against high pay packages for their executives, leading in some cases to the resignation of several prominent CEOs.
Mr. Glasenberg defended the award of large executive remuneration packages in order attract talent, noting that shareholders need to choose between either a low-paid "care taker" CEO or a high-paid entrepreneurial leader that acts like the owner of the company.
Xstrata shareholders are due to vote on a merger of the two companies and Xstrata's retention package on July 12. Glencore and Xstrata need both shareholder approval and regulatory approval to seal the deal to create a mining juggernaut with a market capitalisation of $68 billion. Although Xstrata's shareholders will be able to vote on both the deal and retention package in separate votes, the deal cannot be approved without accepting the retention package.
Mr. Glasenberg said it wasn't up to Glencore to decide what would be an appropriate retention package. "It's not up to me. It's up to the board of Xstrata."
He also didn't say whether Mr. Davis would step down as CEO if Xstrata's retention package fails to get shareholder approval.
He did, however, say that "if I was the CEO and my shareholders voted down my salary, my compensation, because they didn't believe I was worth it, you [have] got to leave and you should resign."
The deal is expected to close in the third quarter.
Write to Alex MacDonald at firstname.lastname@example.org
(END) Dow Jones Newswires
June 07, 2012 22:28 ET (02:28 GMT)
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