The planned merger of two of the world’s largest mining and commodity companies, Glencore International and Xstrata, is being threatened by the discovery Xstrata executives showered themselves with $267 million of company funds last month. The deal would create a $66 billion natural resource behemoth. Investors have been excited about the efficiency the new company will have, with operations in more than 100 countries.
“Investors were particularly rankled by a £28.8 million ($44.6 million) payout for Xstrata CEO Mick Davis, which would come on top of his other compensation and wouldn’t be tied to any performance targets,” according to Dana Cimilluca in The Wall Street Journal. The extra payments were considered so outrageous the company’s fifth largest investor called them “unacceptable and depressing.”
Another large Xstrata investor said, “The lack of a performance element in the retention payments ‘runs completely counter to the principles we’re trying to protect,’” and may prefer to lose money than to see the so-called “retention package” be paid, according to the report.
The CEO of Glencore, Ivan Glasenberg, did not sound too happy about his soon-to-be partner. “If this is a package that keeps him, then I have to accept it,” he is reported to have commented.