An influential City group is urging investors to oppose plans that would guarantee a multimillion pound share bonanza to executives at Anglo American as it finalises a $33bn merger with Canada’s Teck Resources.
Sky News understands that the Investment Association’s IVIS voting advisory service has issued next month’s vote on amendments to Anglo’s long-term incentive awards with a ‘red-top’ alert – its strongest possible warning against the resolution.
The development comes days after rival miner BHP approached Anglo for a second time about a potential takeover, before abruptly withdrawing.
Anglo, the mining group which owns De Beers, wants to amend its share awards to guarantee that they would pay out at least 62.5% of their value if the merger completes.
Institutional Shareholder Services, which has recommended that shareholders vote in favour of the merger itself, has also recommended opposition to the bonus scheme amendments.
“The amending of awards to reflect M&A factors not envisioned when the awards were first granted is not considered inappropriate in the UK market per se,” ISS said in a report to clients.
“However, in this case, the amending of in-flight LTIP awards in order to ensure a minimum payout linked to the completion of the merger transaction is.
“Indeed, the linking of variable incentives to the completion of transactions is not considered good practice, which is itself recognised by the company.”
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The IA declined to comment further on the red-top alert.
A spokesman for Anglo American said the proposed changes would drive “even greater alignment with shareholders’ interests”.
