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Glencore-Xstrata merger approved but retention planrejected

XSTRATA'S shareholders approved a plan to create the world's fourth-largest diversified miner with

market capitalisation of about $US70 billion ($67 billion) by merging the two Anglo-Swiss miners in a

all-share deal. However, more than 78 per cent of Xstrata's voting shareholders voted against proposeretention packages totally some 140 million pounds ($214 million).

As a result the deal will now go ahead without the packages that Xstrata's board had said were essential for

retaining some 70 of its managers who will be responsible for more than 80 per cent of the combined

company's earnings.

Following the vote, Xstratas non-executive chairman Sir John Bond said he would step down once the merg

has been completed, marking the first major resignation following the overwhelming rejection of the board's

recommended retention packages.

"In the light of the shareholders' decision not to support the board's recommendation, I have informed theXstrata plc board and Glencore's current chairman that, once the merger has completed, I intend to...step

down." Mr Bond said. He added he would instruct the new board to start a search process for a new

independent non-executive chairman and would leave once the search was satisfactorily completed.

Mr Bond, 70 years old, has been Xstrata's chairman since May 2011 and played a key role in the merger

process. However, he faced mounting dissatisfaction from some shareholders after Xstrata's second-largest

shareholder, sovereign wealth fund Qatar Holding, secured a 3.05 share swap ratio offer from Glencore after

threatened to vote against the original Xstrata-backed 2.8 share swap ratio, a move that would have scuppere

the merger.

Mr Bond also faced criticism for agreeing to the excessive retention payments and for backing a voting

structure that made approval of the merger contingent upon acceptance of the retention packages.

After canvassing shareholders on two separate occasions, Xstrata's board tweaked the packages to make them

share based and to include performance targets for some top executives. The board later proposed to decoup

the retention packages from the merger vote but neither move proved sufficient to gain the necessary

shareholder support.

Xstrata's chief executive, Mick Davis--who will become CEO of the combined Glencore Xstrata PLC for on

six months before handing over to Glencore CEO Ivan Glasenberg--said he regretted the shareholders' reject

of the retention packages since it "introduces unnecessary risks to the merged company's future value

THE AUSTRALIAN

ALEX MACDONALD DOW JONES NOVEMBER 21, 2012 12:44PM

8/9/2019 Glencore-Xstrata merger ...jected | The Australian

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proposition" but he said "shareholders...have spoken clearly and we respect their views."

The spread of Glencore shares to Xstrata shares closed at 2.97, the closest they have been to the revised offe

since the deal was announced in February.

The deal now needs final anti-trust regulatory approval from the European Union, China and South Africa,

Xstrata said.

Additional reporting: Ed Ballard

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