Picture: REUTERS

XSTRATA CEO Mick Davis might lead an exodus of the company’s top executives after its shareholders on Tuesday approved a $31bn merger with Glencore, but rejected a £144m management retention scheme that the miner’s directors had proposed.

The shareholder vote on the deal will bring the 10-month saga one step closer to its conclusion, uniting Xstrata’s output of copper, coal and nickel with Glencore’s marketing and trading expertise.

But the snubbing of the retention scheme prompted Xstrata chairman John Bond, who will be chairman of the combined group, to announce yesterday that he would step down once a replacement is found.

Mr Davis, who with his management team has grown Xstrata to a multibillion-dollar company from one worth just $500m in a decade, is expected to step down in six months in favour of Glencore’s Ivan Glasenberg.

Mr Davis has been tipped to replace outgoing Anglo American CEO Cynthia Carroll. He was asked during yesterday’s shareholder meeting in Zug, Switzerland, whether he would be starting another business or retiring.

"I have not yet decided what my future plans will be but certainly retirement will not be part of them," Mr Davis said.

The controversial management retention scheme for 70 top Xstrata managers was rejected by 78.4% of Xstrata shareholders voting on Tuesday.

Glencore Xstrata International, the new name for the company, will have interests in about 35 coal mines in Colombia, Africa and Australia, and account for about 10% of global seaborne exports of the fuel. It will be the world’s third-biggest producer of mined copper, the largest zinc miner and the biggest exporter of coal burnt by power stations.

The group will have about 11% of the 13-million-ton global zinc market and about 40% of the 1.9-million tons of the metal produced in Europe.

One large Xstrata shareholder, asset manager Knight Vinke, said at the meeting yesterday that it had no confidence in the "independence and robustness" of the board and had voted against the deal. "We are extremely concerned with regard to the ability of the board of the newly merged company to represent our interests," said David Trenchard, vice-chairman of Knight Vinke.

"Good governance must now take centre stage and we intend to broaden our discussions with fellow shareholders to ensure that this is the case."

But most Glencore shareholders backed the merger. At the meeting in Zug, which lasted just 12 minutes, over 99% of voting shareholders backed the deal.

The deal, announced in February, has already had more than its fair share of twists, with the original terms panned by shareholders — some of whom also took exception to retention payments for Xstrata executives.

Qatar’s sovereign wealth fund and Xstrata’s second-largest shareholder after Glencore said last week it would back the deal unreservedly. But the fund, which played a pivotal role, did not approve the controversial packages proposed for Xstrata’s key team.

In negotiations with Qatar, Mr Glasenberg insisted he become CE of the combined company rather than Mr Davis, who is expected to leave six months after the deal closes but can depart earlier if he wishes.

Glencore must also overcome European Commission concerns about potential competition problems the deal poses.

The trader has offered to sell Xstrata’s German zinc smelter, after its first solution was deemed insufficient by regulators.

With Bloomberg and Reuters