Xstrata chief Mick Davis is in line for a potential 75m pound payout as head of the company created from the miner’s proposed merger with commodity giant Glencore. The payout includes a 28.8m pounds in “retention awards”, mostly in cash, simply for staying at the new company for three years, regardless of his performance. Another 144m pounds will be handed out among 72 other Xstrata executives in the same way, to keep them on for two years. The rest of Mr Davis’s package comprises the roughly 9.8m pounds he could get per year in salary, bonus, benefits and the like. He is also in line for 6m a year via a long term incentive plan if he hits targets and the scheme remains the same, according to The Telegraph.
The International Monetary Fund denied reports yesterday that it had begun planning a bailout for Spain as speculation mounted that the country was on the verge of asking for the biggest financial rescue in history. Initial planning was said to have started at the IMF’s European department, reversing the slide of US stocks this week over fears of a banking collapse in Spain. The three-year rescue plan, a combination of IMF and EU loans, could total €300bn (£240bn) if Spain’s international borrowing costs continued to rise, sources said. Spain’s most pressing need is to find €10bn to bail out Bankia, the country’s third biggest bank, which the Government pledged to rescue, The Times reports.
The Government needs to take urgent action to boost Britain’s flagging economy or face years of sluggish growth. The British Chambers of Commerce has slashed its growth forecast from 0.6% to 0.1% for the year and warned that public sector net borrowing would be £6bn higher than the Office for Budget Responsibility expects as the weak economy takes its toll on tax receipts. Its outlook for jobs is just as gloomy, with the number of jobless Britons set to rise by 275,000 to 2.9m in the second half of next year despite recent falls in unemployment. This is mainly down to public sector spending cuts, many of which are yet to be implemented, says The Times.
Fears that America’s economic expansion is losing steam were ignited on Thursday by a blitz of disappointing data. The number of Americans filing new jobless claims climbed 10,000 to 383,000 last week, according to the Labor Department. A separate survey from ADP Employer Services reported that 133,000 jobs were created in May compared with a forecast of 150,000. Signs that the job market is stalling is troubling because it has proved the brightest part of the US economy so far this year. The data is likely to be seized on by Mitt Romney, who this week became the official Republican candidate in November’s presidential election. The news from the labour market came as official estimates for how rapidly the economy grew in the first three months of the year were cut. Gross domestic product expanded at a 1.9% annual pace in the first quarter, the Commerce Department said, down from an earlier estimate of 2.2%, The Telegraph writes.
Angela Merkel insisted that there were “no taboos” in the battle to shore up the euro as Germany came under mounting pressure to defend the currency and the flight of investors from Spain accelerated. The German Chancellor said that the EU should be ready to consider all options to halt the crisis, amid demands for greater integration including in the region’s banking system. Her words came as Mario Draghi, the President of the European Central Bank, warned that his institution could not fill the vacuum being left by political inaction at a European level, according to The Times.
Morgan Stanley chief executive James Gorman has hit back at criticism of the bank’s leading role in Facebook’s $104bn (£67bn) flotation, dismissing speculation of “nefarious activity” as false and describing as “naive” investors who expected the shares to surge. At a weekly meeting with staff, Mr Gorman said that they should “be proud of the job your colleagues did and don’t judge us on what happened over a couple of days”. Morgan Stanley was the lead adviser on the record-breaking initial public offering but is now being sued alongside several other banks for allegedly failing to disclose to all potential investors that they cut their estimates for how much profit Facebook would make this year, The Telegraph says.