Bosses of mining giant Xstrata warned that their £60bn tie-up with commodity trader Glencore is at risk since of £240m payoutsBosses of mining giant Xstrata were warned on Friday that their £60bn tie-up with commodity trader Glencore was at risk since of the “unacceptable and depressing” £240m payouts they would be due under the controversial deal.As Xstrata chairman Sir John Bond was preparing to embark on a meeting with mad shareholders in the mining collection in an effort to win backing for the payments, Vodafone was also risking the wrath of investors by revealing that chief executive Vittorio Colao stands to receive £11m this month from a performance plot. Colao’s pay follows a windfall from a US joint venture that helped the mobile telephone corporation become the largest dividend payer in the UK.Average Lifetime Investments, which owns 2% of Xstrata, said the Glencore deal should be opposed and Fidelity, which owns 1.1%, warned that the proposed deal was “at risk”.Xstrata shareholders will meet Bond in coming days to try to know why the 73 members of Xstrata management demand retention packages of £172m. Some managers are also receiving £44m in payoffs from their existing roles as well as having a package of extended-term bonus schemes pay outside earlier than would otherwise have been the condition. Another £25.5m of shares is being awarded to them though fresh extended-term incentive plans.Xstrata chief executive Mick Davis – who will capture the same role in the enlarged corporation – stands to receive nearly £29m in a three-year retention package. He will also be awarded shares worth an estimated £6m through a extended-term incentive plot and have 2m shares – worth encircling £23m at contemporary prices – released to him early as a result of the deal.Shareholders are particularly incensed that the merger cannot go ahead if shareholders ballot against the pay deals on 12 July. Glencore, which already owns 34% of Xstrata and is offering 2.8 of its shares for every share in the mining corporation, cannot ballot on the deal, which requires approval from 75% of investors, or on the pay deals, which demand a simple 50% majority. Much before these retention awards were announced, Xstrata had faced a 40% protest ballot over its pay plans at at the end month’s annual meeting where two directors also faced revolts.”The terms of the pay arrangements associated with the merger of Glencore and Xstrata are provocative and insensitive given the contemporary climate. These arrangements have converted the ballot on the merger into a referendum on remuneration policy at Xstrata and have, therefore, place the proposed deal at risk,” said Dominic Rossi, global chief investment officer of Fidelity.”In effect the interests of management have been placed ahead of those of shareholders. If the board believes that the proposals are justifiable, they should be prepared to give shareholders a standalone ballot on remuneration so that shareholders may ballot on the merger separately.”David Cumming, head of equities at Average Lifetime Investments, who had already argued that the terms of the deal were not excellent enough, said the Xstrata payments made the “already inadequate offer … much less palatable”. He said the payouts, most of which do not have performance conditions attached, were “unacceptable and depressing”. Investors were also concerned about the precedent that might be locate by the payments which Xstrata said were needed since “retaining a stable management team with a track record of value delivery is in the interests of Xstrata shareholders.”At Vodafone, Colao’s base salary rose 4% to £1.1m in the year to March 2012. He received just over £3m in cash including salary, pension payments, cash in lieu of dividends, benefits and bonus. Some £3.7m of shares from extended-term incentive plans vested during the year, taking his total to £6.8m. A further £11m vest this month. He received the payments in a year during which America’s largest mobile network, Verizon Wireless, in which Vodafone owns a minority stake, resumed dividends, handing over £6.5bn which was passed on to UK investors.Some 22m shares – worth £38m at the contemporary share value – have been awarded and earmarked under Colao’s incentive schemes since he joined the corporation in May 2008. “Our remuneration targets are stretching and closely aligned to the interests of our shareholders,” a Vodafone spokesman said.XstrataMiningGlencoreMergers and acquisitionsExecutive pay and bonusesVodafoneJill TreanorJuliette Garsideguardian.co.uk © 2012 Twitter News and Media Limited or its affiliated companies. All rights reserved. | Employ of this content is subject to our Terms & Conditions | More Feeds
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