As Glencore grows, investors ask about life after Ivan – by By Clara Ferreira-Marques and Sinead Cruise (Reuters U.S. – June 20, 2013)

http://www.reuters.com/

LONDON – (Reuters) – Glencore Xstrata (GLEN.L) 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 grueling 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 Glencore.

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 from.

Glencore’s divisional heads are well regarded and according to a second source with direct knowledge of Glencore, outsiders often do not realize the extent to which these executives – all shareholders – are familiar with each others’ businesses.

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