LONDON (Reuters) - Top 10 Xstrata XTA.L shareholders Standard Life Investments and Fidelity Worldwide Investment have lashed out at the miner’s plans to pay a $46 million ‘golden handcuff’ to its CEO, sparking a new battle with investors and threatening its big-ticket takeover by Glencore (GLEN.L).
Mick Davis is slated to receive a three-year retention deal worth almost 30 million pounds if Xstrata’s $30 billion takeover by the commodities trader proceeds.
“The proposed remuneration payments ... and the excessive retention payments to ensure the commitment of a management team who are supposedly supportive of the deal, all without any requirement in terms of performance conditions to deliver anything for shareholders, is unacceptable and depressing,” David Cumming, SLI’s Head of Equities said.
“This document makes supporting Glencore’s already inadequate offer for Xstrata even less palatable. Consequently we still believe it should be opposed,” he added.
Fellow top investor Fidelity echoed SLI’s negative standpoint on the deal.
“The terms of the pay arrangements associated with the merger of Glencore and Xstrata are provocative and insensitive given the current climate,” Dominic Rossi, Global CIO Equities, Fidelity Worldwide Investment, said.
“In effect the interests of management have been placed ahead of those of shareholders.”
Reporting by Sinead Cruise