Xstrata investors urged to reject Glencore nominees

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Xstrata PLC
XTA.L
1,458.50p
+22.00+1.53%
04/19/2011
By Brenda Goh
LONDON | Tue Apr 19, 2011 11:41am EDT
(Reuters) - Xstrata (XTA.L) investors should vote against board directors nominated by the Swiss miner's top shareholder Glencore, including Glencore Chief Executive Ivan Glasenberg, a leading advisory service said.

PIRC, which advises funds with a total of more than 1.5 trillion pounds ($2.4 trillion) in assets on corporate governance issues, said shareholders meeting next month should also reject two other directors who have been on the board for almost a decade, and the executive pay plan.

"There is insufficient independent representation on the board in our view," PIRC said in a circular on Tuesday.

"Non-executives Ivan Glasenberg, Aristotelis Mistakidis and Tor Peterson are not considered independent by the company or PIRC as they are nominees of Glencore International."

PIRC questioned the independence of non-executive director Steve Robson and senior independent director David Rough, who have both served on the board for over nine years.

Glencore, the world's largest diversified commodities trader, owns just over 34 percent of Xstrata and is widely expected to make a bid for the world no. 4 copper miner once it completes its planned $12 billion London listing.

Corporate governance, and the issue of how small shareholders will be protected in the event of a takeover, has been a key concern for both Xstrata investors and potential investors in Glencore, due to make its market debut next month.

Xstrata said in a statement that its board has a majority of independent directors and will continue to do so after the AGM.

The miner said it had considered the independence of board directors Rough and Robson "in the light of their service and is satisfied that they both continue to be independent in both character and judgment and that, in view of the appointment of a new independent chairman, it is important to maintain an element of continuity."

John Bond, outgoing Vodafone chairman, is set to take over at Xstrata after the May meeting, replacing Willy Strothotte, who is also stepping down from the same role at Glencore.

PIRC said investors should also oppose Xstrata's pay plan, citing excessive combined remuneration and overly generous termination payments. It has advised investors to vote against Xstrata's pay plan for the past two years, and roughly a third complied in 2009 and 2010.

"PIRC considers that any pre-determined termination payments should be limited to one year's salary and benefits," it said in Tuesday's circular.

Chief Executive Mick Davis received just short of $9.1 million in salary, bonus, deferred bonus, housing allowance and other benefits over 2010, up from almost $7.8 million in 2009.

Xstrata's annual general meeting is due to take place in Zug, Switzerland on May 4.

(Reporting by Brenda Goh; Editing by Mike Nesbit)