Anglo American's Los Bronces copper plant in Chile. The London-based miner announced plans in September to buy Vancouver's Teck Resources for roughly US$20-billion.Supplied/Anglo American via Reuters
Anglo American PLC NGLOY is scrapping a controversial executive bonus plan tied to its proposed acquisition of Teck Resources Ltd. TECK-B-T after the multimillion-pound payouts raised the ire of shareholders.
The British mining company is changing course on the eve of shareholder votes at both Anglo and Teck that will decide whether the deal will go ahead.
London-based Anglo in September announced plans to buy Vancouver-based Teck for roughly US$20-billion in an all-share deal.
When Anglo unveiled the transaction, which was billed as a merger of equals, it proposed amending the performance criteria for bonuses to be paid to its chief executive officer, Duncan Wanblad, and other executive directors.
Under the revised plan, at least 62.5 per cent of share bonuses for 2024 and 2025 would vest if the Teck deal succeeds, regardless of how the executives perform in other areas. Under the original plan, the vesting of shares was based on a range of factors, including stock performance, cash flow, and environmental, social and governance metrics.
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Proxy advisor firm Institutional Shareholder Services Inc. spoke out against the amendment to the bonus plan, advising shareholders to vote against the resolution in the upcoming meeting.
“Transaction-related remuneration is not considered good market practice in the U.K.,” ISS wrote in a recent report.
In addition, paying such a major chunk of the bonuses based on a single metric undermines the other performance criteria that management is judged on, ISS said.
Bowing to the pressure, Anglo in a statement on Monday said the compensation resolution has been removed from the meeting docket after shareholders expressed concerns.
A separate resolution that will see its shareholders vote on its proposed acquisition of Teck remains the main item for consideration at the meeting to be held on Tuesday. A majority of votes cast by Anglo shareholders must be in favour for the Teck deal to proceed.
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Teck shareholders also meet on Tuesday to vote on the deal. At least two-thirds of votes cast must be in favour for deal success.
Opinion is divided in terms of whether Teck will obtain the votes it needs to succeed.
Dating to 1913, Teck is one of Canada’s biggest and oldest mining companies, with domestic and international operations in copper, zinc, lead and germanium. In British Columbia, Teck operates the Highland Valley copper mine and the Trail smelter.
Tyler Tebbs, founder of event-driven research firm Tebbs Capital said that Teck shareholders should vote against the deal. The Canadian miner and Anglo are combining at a time of weakness, he said.
“The marriage of Teck Resources and Anglo American PLC isn’t a merger of equals. It’s a merger of weak-quals – two weak miners coming together to ward off other suitors,“ he said.
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Before launching its bid for Teck, Anglo successfully fought off a takeover attempt by Australia’s BHP Group Ltd., the world’s biggest mining company, in 2024. A few weeks ago, BHP tried again to buy Anglo but was once again rebuffed.
Glencore PLC tried to acquire Teck in 2023, but Teck’s management rejected the approach, electing to sell only its legacy coal business to the Swiss commodities trader.
Before Teck agreed to a zero-premium acquisition by Anglo, Teck’s share price was in the doldrums, owing to operational struggles at its biggest copper mine, Quebrada Blanca, which is located high up in the Andes in northern Chile.
Mr. Tebbs says that Teck would be better off taking the next few years to fix the problems at QB2, which he says will put the company in a much better position to sell itself at a far higher price at a later date.
“The timing makes no sense, especially for Teck,” he said. “If QB is challenged, why negotiate from a position of weakness?”
In addition to the shareholder votes, the transaction must be cleared by the Canadian federal government on a net economic benefit basis. The Globe and Mail reported that the transaction has already been cleared on national security grounds by Ottawa.