Why isn't this copper miner smiling? He's getting a $45 million bonus just for staying on

The glossy prospectus giving details of the creation of a $90 billion mining and commodities trading behemoth is on its way to Glencore and Xstrata shareholders.

The paperwork already filed on Thursday shows Mick Davis, Xstrata CEO, receiving a compensation package worth $44 million for just staying on regardless of the performance of the company.

In all $265 million will be doled out to senior management at the miner to stop them from jumping ship reports the FT.

The generous retention bonuses do however add another complication to the already contentious merger:

The pay arrangement will be put to a separate shareholder poll, which is “inter-conditional” with the vote on the deal itself. That means if Xstrata investors fail to back the management payouts, the deal would collapse.

Shareholders' largess would not stop there.

The Chicago Tribune reports the two companies are spending a combined $200 million on advisers and legal counsel to push the deal through. Glencore is being advised by Citigroup, Morgan Stanley, Credit Suisse and BNP Paribas while Xstrata is being advised by Deutsche Bank, JP Morgan, Goldman Sachs, Nomura and Barclays Capital.

The terms of the deal have not changed:  Swiss-based and London-listed  Glencore already owns 34% of Xstrata and is offering 2.8 shares for every one of Xstrata. The deal still faces stiff opposition from Xstrata shareholders who accuse Ivan Glasenberg, chief of Glencore who will now become deputy CEO of the combined group, and Davis of negotiating "a cosy stitch-up” without consulting them about getting a better offer rather than a 'merger of equals.'

Glasenberg and Davis received a boost to their chances of selling the deal a fortnight ago when the oil and natural gas rich nation of Qatar said it has plans to up its stake in Xstrata to over 10%, which would make the country’s sovereign wealth fund the diversified miner’s second largest shareholder.

Aside from second largest shareholder BlackRock, other institutional investors have all threatened to block the deal, but Qatari support should provide Glasenberg and Davis the necessary backing they need to push through the deal.  75% of shareholders must vote in favour of the deal with Glencore prevented from voting so if the opponents can cobble together just over 16% of the vote – scheduled for 12 July – the deal could be thrown out.

Those holding out for a sweetener – something Glasenberg has repeatedly rejected – point to the fact that growth prospects for Xstrata is much healthier than Glencore.

Xstrata is the world’s biggest exporter of thermal coal and the fourth-largest copper producer and in the decade under Davis has gone from having a fewer than 2,500 employees to a workforce exceeding 70,000 in 20 countries.

A combined Xstrata and Glencore would have revenues in excess of $100 billion with as much as 80% of sales earned from mining. A Glenstrata, as it has been dubbed, would become the 4th largest miner on the planet.

Even before building up Xstrata through a series of billion dollar transactions, Davis was a formidable dealmaker who with fellow South African Brian Gilbertson created Billiton. Davis left for Xstrata after Billiton was sold to BHP in 2001.

Glasenberg and Davis both cut their teeth in their native South Africa’s coal industry in the 1980s.

Glasenberg is no slouch when it comes to buying up companies either. In March Glencore snapped up Canada’s grain handler and agricultural retailer Viterra for $6 billion.

Apart from shareholders blocking a deal the European Union is stepping up scrutiny of the mooted merger after steelmakers and other European players "raised fears that the deal could create too powerful a player" in the market for zinc, nickel and coal.