Anglo Drops Executive Pay Tied to Teck Merger Ahead of Shareholder Vote

Anglo American Plc announced Monday that it has withdrawn a resolution proposing changes to executive incentives tied to its pending takeover of Teck Resources Ltd. The move comes just one day before shareholders are set to vote on the $53 billion merger. The resolution, which would have linked 62.5% of long-term incentive awards to the completion of the deal, had drawn criticism from investors and advisory firms according to reports.

The Anglo American board said the withdrawal follows concerns from shareholders who felt the proposed changes did not align with standard remuneration practices. The company emphasized that the merger remains conditional only on the approval of new share issuance and not on the executive pay changes. Institutional Shareholder Services Inc. had previously advised against the incentive adjustments, calling them poor market practice.

The merger is expected to create a global mining giant with significant operations in copper, iron ore, and other metals across multiple continents. Shareholders of both Anglo and Teck are scheduled to vote on the deal in special meetings set for Tuesday in London and Vancouver.

Why the Standoff Happened

Anglo's remuneration committee had initially proposed linking 2024 and 2025 long-term incentive awards to the success of the Teck merger. These incentives would have been tied to metrics such as shareholder returns, cash flow, return on capital, and environmental, social, and governance (ESG) performance .

Shareholders and advisory firms raised concerns that such a structure could reward executives regardless of broader company performance. Institutional Shareholder Services Inc. explicitly opposed the plan, stating that transaction-based incentives do not align with good corporate governance standards. Anglo American's board acknowledged the feedback and chose to withdraw the resolution before the shareholder vote.

The company added that the withdrawal does not affect the terms of the merger itself, which still requires approval for the issuance of new shares according to market analysis.

What Analysts Are Watching

The Teck-Anglo merger has drawn scrutiny from both Canadian and global investors. Some analysts have raised concerns about the lack of a takeover premium for Teck shareholders and the potential removal of Teck from key Canadian stock indices . This could impact index investors and make the company less attractive to domestic funds according to market reports.

Anglo American has committed to engaging further with shareholders on remuneration policies for its 2026 Annual General Meeting. The company's board still believes the incentive proposal was a practical way to support the merger but ultimately chose to prioritize investor concerns.

The merger faces additional regulatory hurdles, including approval from Canadian authorities. The country's federal government recently passed the initial 45-day national security review period without extending it, effectively granting default clearance according to government filings. However, regulatory and shareholder approvals remain key steps before the deal can finalize according to analysts.

Risks to the Outlook

The merger remains under significant investor and regulatory scrutiny. While the government has cleared the deal on national security grounds, concerns persist around competition, index inclusion, and executive compensation.

Analysts have noted that the merger could reduce competition in Canada's mining sector and affect job security in the country. Some Teck shareholders oppose the deal due to the lack of a premium and the potential dilution of value, particularly for Teck's copper assets.

Despite these challenges, Anglo American and Teck continue to push for shareholder approval. Anglo's board has reaffirmed its support for the merger and remains confident in the strategic benefits of combining operations. The final outcome will depend on how shareholders in both companies vote on Tuesday.