Fertilizer Markets and Finance

The Association of British Insurers (ABI), which represents around a fifth of investments on the London Stock Exchange, issued a so-called “red-top alert” on Thursday over mining group Xstrata’s plans to pay $342 million (£217 million) to its senior management to stay after the company’s planned merger with commodities trader Glencore.

The unusual alert, considered the ABI’s most serious warning, indicates a breach in corporate governance according to Financial Times and was sent this morning to over 300 members.

“The ABI is always skeptical about the effectiveness of retention payments,” said Andrew Ninian, ABI head of corporate governance in a statement. “In this case we have raised further concerns around the significant retention awards being offered to Xstrata executives which aren’t linked in any way to performance.”

The ABI said the alert doesn’t constitute a recommendation on how its members should vote on the remuneration package, nor does it constitute an opinion on the merger; the red top alert only “flags concerns” and is strictly focused on the remuneration arrangements.

Xstrata shareholders will vote on July 12 on both the $70 billion merger and the pay arrangements, which need the approval for the deal to continue. At least half of the votes must back the pay plan, with Glencore prevented from voting its 34% stake.

Read more at Mining.com