Glencore should just name Ivan Glasenberg chairman

May 16, 2013

By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

John Bond’s ouster is an opportunity for Glencore Xstrata to make a fresh start in the boardroom. Best practice would dictate that the departing chairman’s permanent replacement be a strong outsider. That precludes tapping Ivan Glasenberg, the newly-merged miner’s CEO and its biggest shareholder. However, a dual mandate might better reflect corporate reality.

Shareholders – including some top Glencore executives – were apparently eager to show Bond the door after his controversial handling of the year-long takeover battle as chairman of Xstrata. With his unexpectedly quick departure, and the ouster of all other former Xstrata directors at the company’s annual meeting, the Glencore-isation of the top ranks of the combined company is now nearly complete.

The new group appears intent on getting the succession right. Senior independent director Tony Hayward, the former BP boss, will become interim chairman and lead a search for a permanent replacement. According to Reuters, he will not seek the job himself.

Best practice suggests Glencore Xstrata should tap an outsider with enough force of personality to act as a check on the hard-charging Glasenberg, who owns just over 8 percent of the company. The right candidate should have a standalone reputation to put on the line, and be able to navigate the waters of the City of London.

Glasenberg will continue to wield massive power at Glencore Xstrata no matter who the chairman is. Some analysts see that not as a bug, but as a feature. Fund managers’ inboxes are awash with research reports lauding the miner’s strong alignment of management and investor interests. They might reconsider owning the stock if Glasenberg ever stepped down as CEO.

Governance gurus would be apoplectic if Glencore Xstrata chose to flaunt principles and appoint Glasenberg chairman. That’s probably enough to stop the company ever considering it. But it would just reflect reality: Glencore Xstrata’s future is bound up with Glasenberg’s, and an owner-manager with most of his personal fortune tied up in his company’s shares won’t easily be controlled or pushed around.

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