Glencore Xstrata Plc, the world’s biggest exporter of power station coal, named former Morgan Stanley Chief Executive Officer John Mack among three new board members to replace departed directors from Xstrata Plc.
Mack and Peter Grauer, chairman of Bloomberg LP, the parent company of Bloomberg News, join the board as independent non-executive directors. Current senior Glencore Xstrata executive Peter Coates becomes an executive director, the Baar, Switzerland-based company said today in a statement.
Glencore’s $29 billion all-share takeover of Xstrata, completed last month, added coal, nickel, zinc and copper mines to its cotton-to-crude oil trading empire and created the world’s fourth-biggest mining company. Glencore Xstrata continues to consult with shareholders as it searches for a new chairman, Tony Hayward, interim chairman, said in the statement.
“These are interesting appointments,” SP Angel Corporate Finance LLP analysts said in a note to clients. “John Mack has a reputation of being a cost cutter.”
Three former Xstrata directors Ian Strachan, Con Fauconnier and Peter Hooley, were rejected by shareholders at last month’s annual general meeting in Switzerland. A fourth, Steve Robson, quit hours before the AGM, which also saw the ousting of then Chairman John Bond, formerly of Xstrata, with 81 percent of investors voting against his appointment.
Former BP Plc CEO Hayward, already a Glencore director, was made interim chairman last month. He is due to stand aside once a replacement is found.
Mack, 68, stepped down as chairman of Morgan Stanley at the end of 2011, two years after leaving the CEO role he held at the Wall Street securities firm from 2005. Mack boosted businesses including trading, private equity and mortgages, a strategy that backfired when the bank posted its first quarterly loss in 2007 on the eve of the financial crisis.
Since leaving as Morgan Stanley’s chairman, Mack has become an adviser to companies including buyout firm KKR & Co., where he signed on last year. The onetime bond salesman and trader had a 35-year career at Morgan Stanley.
Mack, who developed a reputation over the years for cutting costs, not only ran Morgan Stanley and Credit Suisse First Boston at separate times, but also did a brief stint in 2005 as the chairman of what was once the world’s largest hedge fund, Arthur Samberg’s Pequot Capital Management Inc.
The three appointments leave Glencore Xstrata as the largest company on London’s benchmark FTSE 100 Index without a female board member. Glencore Xstrata ranks 21st in the index by market value.
While the U.K. government has ruled out imposing quotas, Prime Minister David Cameron has urged companies to do more to promote women to board level. A 2011 report by Mervyn Davies, a former banker, called for a target of 25 percent female representation at the biggest businesses.
Glencore said in February that the appointment of a female director will be an “important area of focus for the new company.”
Glencore Xstrata fell 0.6 percent to 300.55 pence by the close in London, the lowest in 11 months. The company 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.
The combined group expects to generate synergies “well above” the stated target of $500 million a year by combining with Xstrata, Chief Executive Officer Ivan Glasenberg said last month. He’s closing Xstrata’s Zug and London offices as part of an effort to cut costs.
Glencore Xstrata is studying a plan to combine some of its Australian coal operations with mines run by Rio Tinto Group to reduce costs, two people with knowledge of the matter have told Bloomberg News.
“Changes are already afoot at the group with Glencore thought to be studying a plan to combine some of its Australian operations with mines run by Rio Tinto,” the SP Angel analysts said. “With high costs in Australia against weak thermal coal prices, any cost initiatives should be welcome.”