Shareholder body slams Xstrata pay plans

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IOL BR mining PIC001 REUTERS File image: Reuters

The Association of British Insurers, an influential shareholder body, on Thursday condemned mining group Xstrata's plans to pay key executives large sums to ensure they stay on after its proposed merger with rival Glencore.

“The ABI is always sceptical about the effectiveness of retention payments,” ABI head of corporate governance Andrew Ninian said after the body issued a rare “red-top” alert on Xstrata's pay arrangements.

“In this case we have raised further concerns around the significant retention awards being offered to Xstrata executives which are not linked in any way to performance.”

Xstrata plans to hand more than 170 million pounds ($267.56 million) to its top 73 managers on the grounds that their expertise is key to future profit.

Xstrata shareholders are due to vote on the proposed $30 billion tie-up with Glencore on July 12, but cannot oppose the retention packages without also voting down the merger, a course that could expose them to losses.

Leading Xstrata investors including Standard Life Investments and Fidelity have previously spoken out against the miner's pay plans, describing them as “unacceptable” and “provocative.”

The row over Xstrata's pay comes amid growing intolerance of excessive boardroom remuneration which drove a wave of shareholder revolts in Britain last month, forcing two high-profile chief executives - Aviva's Andrew Moss and Trinity Mirror's Sly Bailey - to quit.

The ABI, whose members own about 17 percent of the British stock market, said that while it opposed Xstrata's retention packages, it was neutral on the Glencore merger. - Reuters

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