LONDON, April 16 (Reuters) - Glencore shareholders
should reject a proposed pay package for incoming CEO Gary Nagle
at the mining and trading firm's annual general meeting (AGM)
this month, proxy advisers Glass Lewis and Institutional
Shareholder Services (ISS) have recommended.
Glencore announced in December that Nagle would take over as
CEO from Ivan Glasenberg, who has been at the helm for 19 years,
from July.
Glasenberg had a yearly salary of $1.5 million with no
further incentives. He is the company's second largest
shareholder at 9.1%, according to Refinitiv data.
Under the new proposed pay plan, Nagle would receive a
maximum total compensation of $10.4 million, including
short-term incentives and the introduction of a restricted share
plan (RSP), a form of long-term pay whereby shares are held by
the employer for a certain period. Share rewards would account
for 60% of the total.
Around 40% would be held back until two years post
employment under the holding requirement, Glencore said in its
annual report.
"The maximum total annual remuneration that the CEO will
actually receive during his employment is c. $6.4 million
compared to the peer maximum of $11-18 million," it said.
Executive pay has come under increased scrutiny since the
2009 financial crisis and regulators are calling for restraint
as the extent of the damage wrought by the COVID-19 pandemic
emerges.
Companies argue that competitive compensation is key to
retain talent.
In a note to shareholders on Thursday, ISS said the
"proposed pay package is considered excessive with a large
proportion being non-performance-related, partly due to the
introduction of an RSP."
"The package is driven by a salary of $1.8 million, which
stands out as relatively high amongst peers," said ISS, which as
a proxy adviser provides shareholders with research and voting
recommendations.
Glencore's remuneration committee, which said in its annual
report that the proposed remuneration of up to $10.4 million is
aligned to shareholders' interests, compared the executive pay
to peers including Anglo American, BHP, BP
, Rio Tinto and Royal Dutch Shell.
Glass Lewis noted Nagle's compensation would be excessive
for a "newly appointed CEO with no previous experience of
running a publicly listed company."
Glencore's AGM will be split between a webcast on April 22
and a closed meeting on April 29.
(Reporting by Clara Denina; editing by Jason Neely)