Row Looms As Anglo Boss Nets £7m Exit Deal

By Mark Kleinman, City Editor

The departing boss of Anglo American, one of the world's biggest mining companies, is to receive a potential £7m exit package that will reignite the row over executive pay.

I have learnt that Cynthia Carroll, who steps down in April after six years at the helm, will receive an immediate sum on departure of about £3.1m and could receive the larger amount depending on the company's operating and share price performance over the next two years.

Her exit will come just months after the FTSE 100 miner reported its first annual loss since it listed on the London Stock Exchange.

Ms Carroll's severance package is understood to have been signed off by Anglo American's board in recent days. It will be confirmed in the company's annual report, which will be published in the next fortnight.

The American former boss of Alcan's primary metals group will receive an immediate payment of just over £1m, comprising nine months' basic salary, and around 70,000 bonus shares which at the current share price could be cashed in with a value of approximately £1.4m.

These were awarded in previous years but could have been clawed back by Anglo American if Ms Carroll had been deemed to be a 'bad leaver'.

The outgoing chief executive is also expected to be awarded an annual cash bonus of roughly £700,000 for 2012, around a third of the level she received the previous year.

In addition to the immediate payout of about £3.1m, Ms Carroll is also eligible for approximately 30,000 'enhancement bonus shares', which could be worth £600,000, and about 150,000 shares contained in her long-term incentive plan, which at current prices would be valued at just under £3m.

The enhancement bonus shares and the long-term incentive awards were awarded in previous years and will only be paid out if Anglo American meets performance targets over one-year and two-year periods following Ms Carroll's departure

The payment is likely to spark accusations that Anglo American is rewarding Ms Carroll for 'failure' following a near-$5bn (£3.32bn) writedown on the value of a Brazilian iron-ore project called Minas-Rio, which has been under development by the company for several years.

The terms of her departure also come just months before the proposed introduction of Government reforms of executive pay, which will hand shareholders a binding vote on various elements of big public companies' pay policies, including exit payments.

"As part of their pay policy, companies will have to clearly explain their approach to exit payments, which will also be subject to the binding vote," Vince Cable, the Business Secretary, said last year.

"When a director leaves, the company will have to promptly publish a statement of payments the director has received. Companies will not be able to pay exiting directors more than shareholders have agreed," he added.

Amendments to the Enterprise and Regulatory Reform Bill are about to enter the report stage in the House of Lords, with the Government targeting an autumn deadline for them to become law.

Ms Carroll's exit package will not have to be approved by Anglo American investors, although they will have an advisory vote on the company's remuneration report at its annual meeting in April.

Anglo American is chaired by the widely-respected industrialist Sir John Parker, who announced in January that he had picked Mark Cutifani, boss of the South Africa-based gold producer, AngloGold Ashanti, as Ms Carroll's successor.

The company is likely to face criticism that it has calculated Ms Carroll's notice period as commencing from the date that Mr Cutifani's appointment was announced, rather than when her resignation was signalled to the market last October. A company insider pointed out that Ms Carroll had agreed to serve until her successor was in place, a process that could have taken significantly longer.

Ms Carroll, who also sits on the board of BP as a non-executive director, will step down from the board of Anglo American at its annual meeting in April and will leave the company later that month.

The news of Ms Carroll's payoff comes amid an unprecedented level of change at the top of the world's biggest mining groups. In recent weeks, BHP Billiton, the largest industry player, named Andrew Mackenzie as its new chief executive, while Rio Tinto announced the ousting of Tom Albanese, its chief executive, who paid the price for spending $38bn (£25bn) in a top-of-the-market purchase of Alcan, the Canadian aluminium group, in 2007.

Ms Carroll's tenure at the helm has included notable achievements such as a vastly-improved safety record and improved relations with key stakeholders including the South African government.

It has, though, been punctuated by investor grumbling about the pace of change at the company. Ms Carroll was forced to fend off a hostile takeover bid from rival Xstrata in 2009.

Xstrata has since agreed to merge with Glencore, the giant commodities trader, and its chief executive Mick Davis will step down after the deal completes.

Anglo American declined to comment.

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