* Glasenberg's status prompts questions over succession
* Firm's size after Xstrata takeover highlights "key man"
* Glencore insiders say talent pool is wide
By Clara Ferreira-Marques and Sinead Cruise
LONDON, June 20 Glencore Xstrata boss
Ivan Glasenberg, a former coal trader who has been at the helm
for over a decade, is known for his pre-dawn runs, cut-throat
competitiveness and a gruelling travel schedule that shows no
signs of slowing.
Yet while no one expects the imminent departure of
Glencore's top shareholder - at 56, not far above the average
CEO age - the takeover of $46 billion miner Xstrata has prompted
investor questions over how a company so closely identified with
a boss will manage his succession.
This includes not just the process of earmarking future
leaders, but that of rebuilding the board and bringing in a new
chairman willing to act as a counterweight to both Glasenberg
and a culture born of almost four decades as a private company.
"On the one hand you don't want to stifle the
entrepreneurialism, aggression, dynamism that people associate
with Glencore versus the style of the other mining companies,"
said analyst Paul Gait at Sanford Bernstein.
"But on the other hand, you do want to put into place the
processes and protocols that you associate with a bluechip
company," he added.
Glencore - the world's largest diversified commodities
trader and fourth largest miner - fiercely values loyalty and
insiders argue it has a deep pool of internal talent.
Every one of its current, mostly long-standing divisional
heads, they say, is a potential CEO, even if the company has a
strategy of keeping employees to specific commodities throughout
their careers. This, Glencore says, is key for a business that
demands detailed technical knowledge and a deep understanding.
But the key public role played Glasenberg since Glencore's
listing in 2011 makes it hard to separate his straight-talking,
pugnacious appeal from that of the now much broader company.
And yet, in swallowing Xstrata, Glencore has gone from a
trading giant to a much larger mining and trading behemoth.
"There is key man risk - and that is the board's big
problem," said one veteran industry source familiar with
Analyst Chris LaFemina at Jefferies agrees: "Even though the
bench is deep, the perception about his importance means there
is an issue if he were to leave."
"Losing him at Glencore would have the biggest negative
impact on perception on the market - not that there is any
reason to think that will happen any time soon," he said.
And there really is, industry veterans say, talent to choose
Glencore's divisional heads are well regarded and according
to a second source with direct knowledge of Glencore, outsiders
often do not realise the extent to which these executives - all
shareholders - are familiar with each others' businesses.
"People underestimate how much the senior partners talk,
they all take a view on each others' commodities," he said.
But there are still questions about internal progression.
Glencore insiders often portray the company as an almost
Darwinian meritocracy - established players slow down and are
eventually toppled by ambitious bright young things.
Indeed, after news last month of the imminent departure of
aluminium boss Gary Fegel - a rare senior level exit and the
first since the merger closed - insiders and industry sources
hinted he had slowed down, and was overtaken in the process.
For his part, in recent interviews, building on a narrative
that feeds the Glencore brand, Glasenberg has said he does not
adhere to modern worship of a work-life balance. "No beaches",
he told the Wall Street Journal last month.
"People ask why is Ivan so hands on? Why is he travelling
around? Because if he doesn't lead by example, if he slows down
and starts just managing the company and not working flat out,
for sure the people below will start the pressure," said a
senior executive familiar with Glencore. "He can stay in this
job as long as he gives it 100 percent."
But that hands-on dominance is also part of the problem that
has worried some shareholders - one that worked well in a
trading firm with a strong entrepreneurial, if collaborative
spirit - but perhaps less appropriate in one with 150 mining and
metallurgical sites and almost $240 billion in revenues.
The number of employees virtually tripled, compared to
Glencore's size at its IPO, to 190,000, including contractors.
Ultimately, Glencore will appoint a new boss through the
normal, board process, considering external candidates - even
though few would expect an outsider. That could be years away.
But in the short term, it faces the pressing issue of how to
set up the necessary structure, specifically rebuilding a board
decimated after shareholders voted out every Xstrata director at
last month's annual general meeting.
Xstrata chairman John Bond - a City veteran bruised after
his support of a highly unpopular Xstrata executive pay plan -
was replaced in the role by former BP boss and Glencore senior
independent director Tony Hayward, but only on an interim basis.
Hayward has indicated he does not want the job permanently.
Glencore last week named two non-executive directors to the
board - Peter Grauer, investment banking veteran and chairman of
information provider Bloomberg, and John Mack, the former boss
of Morgan Stanley, a bank which is still one of Glencore's key
advisers. It is expected to appoint one more.
"What matters now is to secure the appointment of an
independent chairman who commands the support of both
external and internal shareholders," said the head of corporate
governance at one of Glencore's 20 largest investors.
"These things take time, but this is an opportunity to
address the governance structure."
That chairman will also face the next big cultural change
for Glencore: after private to public, it will be the shift from
a company where employee ownership has been a defining
characteristic, to one where that is more dispersed.
The executive familiar with Glencore said it would have to
look at other companies like Google and Facebook, who have
similar challenges - and similarly emblematic bosses.
"The ownership culture is key," he said. "That is what they
have got to keep - make (the younger generation) behave like
owners, even though they may not be owners to the same extent."