It started with a tale of over-the-top payments – the £170m that was proposed for 70 top Xstrata executives, and then shot down by shareholders – and now it's ending in similar fashion.
Mick Davis will collect £4.6m for not working a six-month stint as chief executive of the merged Glencore Xstrata. That's on top of the £9.6m he will collect for not being Xstrata's chief executive. The double severance payment is what the contracts dictate (two separate contracts, you see), but Xstrata's non-executive directors were dozing when they agreed those terms. Departing chairman Sir John Bond will not be missed.
The interesting subplot is how few of Davis's right-hand men Glencore will keep. Trevor Reid (finance), Charles Sartain (copper), Ian Pearce (nickel), Loutije Smit (alloys), Thras Moraitis (strategy) and Benny Levene (legal) won't be joining Ivan Glasenberg's happy band. That, at least, is an admission that the deal was always a takeover and never a merger – though, sportingly, today's "merger update" maintains the polite fiction.
Is it sensible to run Xstrata, a company with 84,000 employees and contractors, without so many current senior operatives? Xstrata sources swear blind that Glasenberg was trying as recently as six weeks ago to persuade Sartain and Pearce to stay. On the other hand, there may be truth in Glencore's view that the truly valuable executives are those running the mines, rather than their divisional bosses.
We shall see, but Glenstrata certainly is not a simple business. In terms of numbers of staff, it is now vastly bigger than BHP Billiton, the giant of the mining world as measured by market capitalisation. Glenstrata is also minus a chairman since Simon Murray, who would have stepped aside under the original version of the deal, is no longer credible. The Qataris, whose shareholding now marginally pips Glasenberg's, will presumably have ideas on the right appointment.
As for Davis, he clearly intends to be back. He's taken the lease of Xstrata's London office, a place that could comfortably house 50 people. Is he planning a new mining company, a mining investment fund, or something else? Given that he will be leaving Xstrata with the thick end of £75m once share options, share sales and the like are included, he won't be short of seed capital.
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