By Rob Davies
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Xstrata's top staff will be handed more than £242m upon consummation of its £60bn marriage with Glencore, putting boss Mick Davis in line for £35m.
Davis, who takes home £9.6m in pay and perks each year, will see his package doubled for the next three years via loyalty payments that add £28.8m to his earnings.
He will also be awarded shares from a new performance-related incentive plan worth up to £6m, paying out in 2016.
Completion of the merger, due in the autumn, will also trigger a separate £25m lump sum from Davis’ previous incentive schemes paying out at their maximum level.
Rich seam: Mining can be risky and the rewards high, especially for dealmaker Mick Davis
An inner circle of 73 Xstrata employees will share loyalty bonuses worth £172m for staying with the company for two years.
Excluding Davis, some 35 of those will get £44m as compensation for accepting less senior roles and nearly £20m in performance- related share incentive plans.
The arrangement risks infuriating shareholders â€" some of whom have already criticised the lavish loyalty payments â€" because the deal terms mean no merger can take place without them.
Xstrata insists the set-up is an ‘integral and critical element’ to ensure that enough of its management team stay on to balance the influence of Glencore’s powerful director-shareholders.
City analysts say that because Glencore cannot use its 34 per cent stake in Xstrata to vote, opposition from less than 15 per cent of shareholders could scupper the merger.
Documents circulated to shareholders were packed with assurances that the Swiss commodities trader will not wrest control of the business, to be called Glencore Xstrata plc.
Chief executive Ivan Glasenberg, who will own 8.7 per cent, has pledged not to use his stake to undermine board decisions for two years.
And Xstrata, which would have contributed 84 per cent of profi t had the pair combined in 2011, will provide the majority of independent directors.
Chairman Sir John Bond holds the casting vote in case the two factions disagree.
The tie-up, set to save the firms £324m a year, will trigger job cuts, although the companies would not estimate how many.
Shareholder circulars revealed that former BP boss Tony Hayward â€" who presided over the Gulf of Mexico oil spill â€" will lose his role as head of Glencore’s environment committee.
Instead, he will be senior independent director and pay committee chair, completing his resurrection from the corporate wilderness.
Banks and legal advisers are set to share in a £130m pot for their work on the deal.
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