Glencore Xstrata Plc (GLEN) appointed former BP Plc (BP/) Chief Executive Officer Tony Hayward as interim chairman after John Bond was ousted by shareholders of the world’s largest exporter of power-station coal.
Bond stepped down at the start of Glencore’s annual general meeting yesterday in Zug, Switzerland, saying he didn’t have enough support. Glencore later said in a statement that 81 percent of the votes cast were against his selection. The company said it’s consulting external shareholders and seeking candidates for the chairman’s job. Hayward will stand aside once a replacement is found.
Glencore completed its $29 billion acquisition of Xstrata Plc this month, creating the fourth-biggest mining company. The ousting of Bond and director Steve Robson, who quit hours before yesterday’s meeting, swells the ranks of Xstrata executives who have departed as the takeover is completed. Hayward has been on Glencore’s board since April 2011.
“Shareholders must be pleased to have a veteran, a guy of his caliber, involved,” Paul Gait, a mining analyst at Sanford C. Bernstein Ltd. in London, said by phone. “It did feel slightly shambolic to have the ex-chairman announce his departure on the day of the AGM. Should this not have been arranged beforehand?”
Bond, 71, said in November he wouldn’t take on the role of chairman as planned and would leave once the board created by Glencore’s takeover of Xstrata Plc found a replacement. Yesterday Glencore shareholders also rejected former Xstrata board members Ian Strachan, Con Fauconnier and Peter Hooley as directors. The remuneration report was passed, with 22 percent of votes against.
Glencore, based in Baar, Switzerland, gained 1 percent to 337 pence in London yesterday. The largest publicly traded commodities supplier may consider a listing of shares in Switzerland, CEO Ivan Glasenberg told the meeting yesterday in response to a question from an investor.
Hayward, 55, is the CEO of Genel Energy Plc (GENL), the largest oil producer in Iraq’s Kurdish region. He resigned from BP, Europe’s second-biggest energy company, in October 2010 following the Gulf of Mexico oil spill earlier that year. Eleven workers on the Deepwater Horizon oil platform died following the blowout of the Macondo well on April 20, 2010, which unleashed the worst offshore oil spill in U.S. history.
Hayward teamed up with financier Nathaniel Rothschild to create Vallares Plc, a shell company that raised 1.33 billion pounds ($2.03 billion) through an initial public offering in London in June 2011. Vallares agreed to merge with Genel in September 2011.
Mick Davis, the 55-year-old former CEO of Xstrata, said last month he wouldn’t serve six months in the same role at Glencore Xstrata before handing over to Glasenberg as previously announced.
Senior Xstrata executives including Charlie Sartain, head of copper, nickel chief Ian Pearce, and Loutjie Smit, interim CEO of Xstrata alloys, have also departed. Strategy and corporate affairs head Thras Moraitis and chief legal counsel Benny Levene will leave after acting as consultants for six months.
Xstrata Chief Financial Officer Trevor Reid said in December he won’t stay on at the combined company. The departure of Bond and Robson yesterday reduces the three-man nominations committee, responsible for steering the selection of the new chairman, to just Hayward.
Glasenberg, a 29-year veteran of Glencore Xstrata, is its largest shareholder with an 8.3 percent stake. He’s navigated the group through two decades of private ownership and headed the company’s $10 billion initial public offering two years ago.
“Glencore needs a chairman with a strong enough personality to stand up to Ivan, a counterbalance and a foil, but without being the type of personality who will curb the entrepreneurial spirit and the dynamism,” Bernstein’s Gait said.
Bond announced his intention to resign after investors defied the Xstrata board’s recommendation to approve a 144 million-pound package of retention bonuses for about 70 Xstrata managers.
“Given the level of sentiment and given how vocal certain shareholders were about the process, surely this can’t have come as a surprise to Sir John,” Bernstein’s Gait said.
The proposed payments were criticized for being offered without any performance criteria. Xstrata amended the package in June, making all bonuses payable in shares and linking payments to the executives to cost-saving targets. Bond handed control of yesterday’s AGM to Hayward as the meeting opened.
“I recognize and respect the strong opposition among many to the retention arrangements which the board felt appropriate to ensure management stability,” Bond said in a statement yesterday.
Bond was chairman of Vodafone Group Plc (VOD) from 2006 until 2011. He had held the same post at HSBC Holdings Plc after joining the lender more than 40 years earlier.
Glencore Xstrata has interests in about 35 coal mines in Colombia, Africa and Australia, accounting for about 10 percent of global seaborne supplies of the fuel. It’s the fourth-biggest producer of mined copper and third-largest in nickel, and employs about 190,000 people in more than 50 countries across its industrial and trading divisions.
Glasenberg told analysts this month he expects to generate synergies “well above” the stated target of $500 million a year. He plans to close Xstrata’s Zug and London offices, and plans regional centers in Sydney, Johannesburg, Toronto, Stamford and Singapore.
The group may save $150 million a year by eliminating Xstrata’s London office, Credit Suisse Group AG analysts said this month. They estimate possible cost savings of $1 billion a year by 2015.
The company has retained two former Xstrata executives as division heads among its 14 senior managers.
“We expect Glencore senior management to dominate the new board and we expect them to impose Glencore’s leaner corporate structure,” Liam Fitzpatrick, Michael Shillaker and James Gurry, analysts at Credit Suisse, wrote in a report this month. The new company may cut duplication and management costs by $200 million to $300 million a year at its copper, coal and zinc units, they said.
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