Glencore plans CEO pay overhaul to speed up windfall after any takeover
Proposals would alter change-of-control provision to mean more long-term share awards vest earlier
Glencore is proposing to change its chief executive’s pay package to allow boss Gary Nagle to cash out his long-term share awards more quickly if the commodities group is taken over.
The UK-listed miner is talking to its shareholders about a new pay deal for Nagle, who has led the group since 2021, according to people familiar with the matter and a presentation made to investors.
As part of the negotiations, Glencore has proposed altering a change-of-control provision that could keep Nagle’s shares unvested, even if he leaves the company following a takeover.
Under the plans, Nagle’s shares in the company would vest if it were bought by a rival and he were replaced as CEO. A proportion of those share awards, which form the bulk of the CEO’s remuneration, would still not be able to be sold for a number of years.
The exact details are still being worked on by the company, according to people close to the discussions. Glencore declined to comment.
The move has raised eyebrows among shareholders given talks early this year between Rio Tinto and Glencore over a $260bn mega-merger, which collapsed over differences on valuation as well as the management of the combined group.
One investor with knowledge of the plans said that it would revive speculation about a deal by specifically addressing the pay issue in the event of a takeover.
The majority of Nagle’s pay comes through a “career shares award”, rather than traditional bonus structure. This year he was paid about $2mn in basic salary, with the remainder of his total pay of $7.5mn coming from long-term incentives vesting, a scheme which was put in place to align his interests with other shareholders.
The board agreed a career shares award of 512.5 per cent of salary, representing 97.6 per cent of the maximum, which the company said reflected the strategic progress achieved under Nagle.
Glencore is proposing to increase the upper end of the range of 525 per cent by a little more than a tenth, according to people familiar with the investor presentation, in part reflecting shareholder feedback regarding the board’s decision to issue the award so close to the top of the range.
Rio Tinto has proposed a 56 per cent bump in target pay next year for its chief executive Simon Trott. The proposed package includes raising long-term incentives to nine times salary from the current five times, and increasing Trott’s target pay package for next year to almost £10mn from £6.3mn.
Glencore is also proposing to slightly increase the rate of fixed pay for Nagle to take into account inflation, although the exact amount will be decided by the board at the end of the year. Nagle currently receives $2mn in fixed pay, a number which has not changed for three years.
Nagle told investors last week that next year could be a bumper year for cash payouts, with the miner in advanced talks over two multibillion-dollar asset sales and its traders expecting a bumper year. Shares in the company have risen about 28 per cent since the start of the year, with the wider mining industry enjoying a boost from the rising price of copper.