LONDON - Glencore shareholders should reject a proposed pay package for incoming CEO Gary Nagle at the 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-million to $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.