John Bond has done the right thing in stepping down from the board of Xstrata ahead of the miner's takeover by Glencore. Shareholders blew a raspberry at him and his board when they voted down a generous bonus scheme for Xstrata managers, in spite of giving approval for the deal itself. Mr. Bond's successor may or may not chair the combined group. Either way, the new chairman will have a delicate repair job fixing relations with shareholders.
Under Mr. Bond's watch, Xstrata directors misjudged the mood of influential shareholders throughout much of the nine-month saga. The original deal terms met vocal opposition from shareholders unhappy with the price. It took Qatari resistance to get Glencore to raise its bid. When the sweetener came, it was with strings: the deal flipped from a merger into a takeover with Glencore chief Ivan Glasenberg as CEO. Tuesday's rejection of a rejigged payout for Xstrata's top 70 managers on Tuesday was the final straw.
It's astonishing that someone of Mr. Bond's experience couldn't get a grip on the situation, although Xstrata's directors, who will make up a majority of the combined board, all share blame for misreading shareholders' mood. Meanwhile, the Glencore board, hastily cobbled together ahead of the commodity trader's 2011 flotation, is still establishing its credibility with investors. Both groups will oversee a vastly enlarged company, whose CEO has a limited track record in public markets.
The new chairman should lead a complete overhaul of the merged group's governance. The right candidate will need to be forceful enough to balance the influence of Glencore's Mr. Glasenberg, a big shareholder, and that of strategic shareholders like the Qataris. The company needs to be run in the interests of all shareholders after all. Such candidates do exist. Former Rio Tinto chairman James Leng, who successfully marshalled shareholder value at Corus, the U.K. steel maker, and mediated between warring shareholders as an independent director at Russian oil group TNK-BP, might fit the bill, as might Roger Carr, president of the CBI business lobby, or former Barclays deputy chairman Nigel Rudd.
Glencore fluffed the chance to get a strong chairman before its float. Now is the time to rectify that error.