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LONDON (Reuters) - Xstrata Chief Executive Mick Davis will get a three-year deal worthalmost 30 million pounds ($46 million) to stay at the helm once theminer joins forces with trader Glencore, a windfall likely to sow ashareholder storm at votes due in July. In documents sent to investors on Thursday detailing the terms ofthe long-awaited $30 billion takeover bid by trader Glencore,Xstrata said it would pay retention deals to 73 of its keyemployees totalling more than 170 million pounds. All managers and senior executives, other than Davis, will beoffered two-year packages to stay on after the all-share merger iscompleted, as Xstrata seeks to hold on to the operating expertisethat built the miner up over a decade. Davis, an industry veteran, is well respected as the architectbehind Xstrata, a mining powerhouse built from the purchase ofGlencore coal assets in 2002. The current plans have him remainingas chief executive of the combined group, with Glencore's IvanGlasenberg as deputy chief executive. Yet the payments, particularly the sum offered to Davis - on top ofan annual salary that already makes him one of the best-paid chiefexecutives in the FTSE 100 - are fomenting discontent among someminority investors, as both Glencore and Xstrata prepare for afinal charm offensive ahead of votes in July. "Mick has made shareholders money at Billiton and Xstrata, but hehas been well paid for that. In these austere times, the 30 millionpounds for nothing seems gratuitous to me," said one top-40 Xstratainvestor, speaking on condition of anonymity. More than a third of voting shareholders rejected pay plans atXstrata's annual meeting earlier this month, amid a broader"shareholder spring" that has shaken up UK-listed companies withpay protests and claimed high-profile scalps. RETENTION "KEY" Xstrata, however, warned its shareholders that the retentionpayments were "key" to the success of the merger, and that it wouldbe impossible to back the deal on July 12 without backing thewindfalls to secure its key employees. "The retention arrangements are intended to secure the transitionof the company's leadership, whose stability has been integral toXstrata's success over a decade and who are essential to the mergerstructure and achieving the potential of the merged company,"Xstrata Chairman John Bond said. The tie-up between Glencore, the world's largest diversifiedcommodities trader, and Xstrata - of which Glencore already ownsalmost 34 percent - will create a mining and trading powerhouse,with more than 100 mines and an oil division with more ships thanBritain's Royal Navy. Glencore's traditional trading activities, though, will account forless than a fifth of profit, making the operating assets, frommines to smelters and concentrators, key. PAY PACKAGE Davis would be set next year to receive over 19 million pounds inretention pay, plus salary, bonus and benefits - as well as adeferred award of shares worth as much as 6 million pounds, as partof a performance scheme, subject to meeting targets over 3 years.So Xstrata may have some convincing to do as Davis hits the roadfor a final round of investor meetings. Minority shareholders matter greatly, as the structure of the dealrequires approval from 75 percent of voting shareholders excludingGlencore, which means just over 16.5 percent of Xstrata'sshareholder base could sink the deal. Since February, however, Qatar has been building a stake in Xstrataand the Gulf state's sovereign wealth fund now owns more than 9.5percent. Analysts and investors say that is likely to provepositive for Glencore and has helped lessen expectations that itwill have to improve the share-swap ratio. Documents sent out to investors on Thursday confirmed Glencore'soffer of 2.8 new shares for every Xstrata share held. "Given markets and Qatar's stake, a change in ratio was growingunlikely," the top-40 investor said. Glencore and Xstrata, connected from Xstrata's very start as aSwiss infrastructure investment company, have long been expected totie the knot, but the two sides will paying as much as $200 millionin fees to advisers, from banks to public relations consultants andlawyers. Banks alone will receive up to $130 million. Glencore is being advised by Citigroup, Morgan Stanley, CreditSuisse and BNP Paribas. Xstrata is being advised by Deutsche Bank,JP Morgan, Goldman Sachs and Nomura, with a role also for BarclaysCapital. Both sides were also advised by former Citi banker Michael Klein,who shuttled between executives to broker the deal. The next step for the miner and trader is to file merger documentswith the European Union and set the regulatory clock ticking. Theysaid current, pre-notification, discussions with Brussels, whichaim to avoid a lengthy and potentially bruising regulatory probe,were "progressing well". The deal is set to complete in the third quarter. Thomson Reuters 2012 All rights reserved SUBSCRIBE to Mineweb.com's free daily newsletter now. I am an expert from plastic-packagingbags.com, while we provides the quality product, such as China Aluminum Foil Bags , Plastic Packaging Bags, Food Packaging Bags,and more.
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