ABI issues "red top" to Xstrata over pay The Association of British Insurers has issued a rare rebuke to Xstrata over the miner's plans to pay £217m to its senior management to retain them after the company's planned merger with commodities trader Glencore. After issuing a so-called "red-top alert" - its most serious warning of a problematic breach in corporate governance - to its more than 300 members, the ABI said on Thursday it was not commenting on the merger itself but was "always sceptical about the effectiveness of retention payments." "In this case we have raised further concerns around the significant retention awards being offered to Xstrata executives which are not linked in any way to performance," Andrew Ninian, head of corporate governance, added in a statement. Xstrata shareholders are due to vote in July on the $70bn merger and the pay arrangements, both of which must be approved for the deal to proceed. Half of voting shareholders must back the pay packages, with Glencore prevented from voting its 34 per cent stake. Investors reacted angrily last month when Xstrata said its board had decided to pay Mick Davis, Xstrata's longstanding chief executive, £29m over three years to stay at the combined group. Immediately after the announcement, investors representing nearly 12 per cent of Xstrata told the Financial Times that they were unhappy with the proposed payout, while Standard Life and Fidelity hit out publicly at the plans, the latter labelling them "provocative and insensitive." Xstrata said on Thursday: "The key issue for shareholders is to evaluate the business and investment case of this merger and determine whether the merger ratio is fair for Xstrata's shareholders. Central to this evaluation are the governance and management arrangements which are integral to delivery of the investment case and minimise risk to our shareholders. The success of the merger depends on Xstrata management transitioning into the new group to manage assets generating more than 80 per cent of the combined earnings. Retaining a stable management team with a track record of value delivery is in the interests of Xstrata shareholders. Xstrata's pay plans were unveiled after weeks of shareholder dissent in the UK surrounding executive remuneration, which culminated in last week's vote by investors at WPP against the pay proposed for Sir Martin Sorrell