Glencore International Plc's (GLEN.L,GLNCY.PK,GLCNF.PK) chief executive officer Ivan Glasenberg has defended the hefty pay being given to retain some key executives of Xstrata Plc. (XTA.L) that the Swiss commodities trader has agreed to merge with.
It was on February 7 that the Swiss mining company unveiled an all-share merger of equals with its 34-percent stakeholder Glencore. The merger, dubbed the 'logical next step for two complementary businesses' would create a $90 billion natural resources group to be called Glencore Xstrata International Plc.
Following the deal, Xstrata shareholders other than Glencore would have a 45 percent stake in the combined entity.
Xstrata plans to pay about 170 million pounds to 73 employees as retention pay. Some shareholders have termed the payments as "excessive" and "depressing."
However, Glasenberg said in a rare public address on Thursday that executives have to be compensated well for their worth. He said they need to be paid well for their entrepreneurial spirit and for working like shareholders, rather than as caretakers.
At the the Melbourne Mining Club dinner in London, Glasenberg said Xstrata decided that it was important to have these executives as part of the deal.
Shareholders seemed particularly concerned about the pay for Xstrata CEO Mick Davis, who stands to get $44.7 million in bonuses over three years.
However, Glasenberg believes one has to pay for a good CEO. "If I was a CEO and my shareholders voted down my salary, my compensation, because they didn't believe I was worth it, I think you've got to resign," Glasenberg said.
Xstrata investors are expected to vote on the acquisition and the payments on July 12.
GLEN.L closed on Thursday at 361.20 pence, up 3.87 percent, on a volume of 24.09 million shares.
XTA.L settled at 965.80 pence, up 2.90 percent, on 41.04 million shares.
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by RTT Staff Writer
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