Anglo American abandons executive bonus plan as Teck merger vote nears

Anglo American PLC has scrapped a special executive bonus plan just one day before shareholders are set to vote on its US$20 billion takeover of Vancouver-based Teck Resources Ltd.The resolution, initially proposed by the British mining giant’s remuneration committee last month, would have tied long-term incentive awards for 2024 and 2025 to both company performance — measured by shareholder returns, cash flow, return on capital, and environmental, social, and governance (ESG) metrics — and the completion of the Teck deal.Bloomberg News reports that under the proposal, at least 62.5% of the awards would have vested upon closing the acquisition.Anglo said on Monday that it withdrew the resolution following concerns raised by shareholders.Both Anglo and Teck investors are scheduled to vote on the merger at special meetings in London and Vancouver on Tuesday.The proposed combined company — to be named Anglo Teck — would form one of the world’s largest copper producers in history, with the overall value of the merger, including debt, estimated at more than $70 billion.It will have its headquarters in Vancouver, but will keep Anglo’s primary listing in London..Sky News previously reported that advisory firm Institutional Shareholder Services Inc. opposed the proposed changes to Anglo’s long-term incentive plan, stating in a recent report that “transaction-related remuneration is not considered good market practice in the UK.”Anglo American has also reaffirmed a US$4.5 billion special dividend for its shareholders, which was first announced on Sept. 9.An Anglo spokesperson told the Western Standard that the dividend was designed “to ensure an efficient opening balance sheet while allowing more balanced participation for Anglo American and Teck shareholders in the go-forward business’ value delivery.”The Teck Resources Limited Letter to Shareholders specifically references the special dividend, stating that under the merger agreement, Teck shareholders are expected to receive shares representing approximately 37.6% of the combined company on a fully diluted basis.“This level of ownership reflects the benefit to Teck shareholders of the special dividend to be paid by Anglo American to its shareholders, which, in addition to achieving an efficient opening balance sheet for Anglo Teck, results in an equity split between Teck shareholders and Anglo American shareholders that reflects a merger of equals,” the letter reads.“As a result, Teck shareholders will own a larger share of Anglo Teck and experience greater participation in synergies, copper-focused growth, and all other future value creation opportunities.”Teck shareholders must approve the deal with at least two-thirds of votes cast, but it remains to be seen whether or not it will pass..WATCH: What the proposed Anglo Teck merger means for Canada's mineral industry .Anglo has previously fended off takeover attempts by Australia’s BHP Group Ltd. in 2024 and again in recent weeks before pursuing Teck.Last year, Teck also sold off a large part of its business, with Glencore acquiring a 77% stake, and the remaining 23% going to Japan’s Nippon Steel and South Korea’s POSCO.Teck had held preliminary talks with Vale Base Metals Ltd. — a Canada-based division of Brazil’s Vale with significant domestic operations — before agreeing to Anglo’s offer.Teck’s share price was struggling prior to the zero-premium acquisition agreement, which some sector analysts argue has diminished Teck shareholders’ negotiating position.In addition to garnering shareholder approval, the transaction requires clearance from Ottawa on a net economic benefit basis.The Globe and Mail reported in late November that the deal has already been cleared on national security grounds despite previous concerns from Industry Minister Mélanie Joly.

Anglo American abandons executive bonus plan as Teck merger vote nears

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