Glencore picks former Morgan Stanley boss John Mack for board

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Glencore Xstrata has appointed John Mack, the former Morgan Stanley boss, as an independent director as it focuses on reducing costs and rebuilding the board of the enlarged mining and commodities trading house.

The arrival of Mr Mack, who gained a reputation as a cost-cutter at Morgan Stanley earning him the nickname “Mack the Knife”, comes shortly after Ivan Glasenberg, chief executive, pledged to reduce costs and even cancel projects.

In a presentation the day after completing its takeover of Xstrata in early May, Glencore promised hundred of millions of extra savings above previous targets. It plans to close Xstrata offices, including the headquarters of the mining group in Switzerland and London, and reduce “management layers”.

The company promised to eliminate “bureaucracy and duplication”. Glencore employs 190,000 people, including contractors, in 50 countries. Mr Glasenberg said at the time the company would comfortably meet the previously promised target of $500m in cost savings and that an additional $300m was within reach.

“There is a lot of low hanging fruit,” he said.

Glencore will update investors on its cost cutting and potential project cancellations, including several multibillion-dollar mines, in late August.

Mr Mack, who is a senior adviser to Morgan Stanley, will be joined as a non-executive director on the new board of Glencore Xstrata by Peter Grauer, chairman of information provider Bloomberg, while Peter Coates, an adviser on the integration with Xstrata, will move over to become an executive director.

The appointment of Mr Mack and Mr Grauer, former executive at Credit Suisse First Boston, fulled investors’ and analysts’ belief that Glencore is building a board full of former investment bankers to embark on further mergers and acquisitions.

Although Mr Glasenberg has played down the likelihood of an immediate acquisition while the company digests Xstrata and Viterra, the grain trader it bought last year, rival executives expect Glencore to be a buyer. But Mr Glasenberg is himself a consummate dealmaker and has closed several buys without even hiring banking advisers, suggesting he sees little need for external counsel.

The appointments of the new directors come weeks after the ousting of Sir John Bond as chairman in a shareholder coup that saw an 80 per cent vote against the reappointment of the City of London veteran. All of the other former Xstrata directors were ousted from the board in mid-May.

Tony Hayward, the former BP chief executive, became Glencore’s interim chairman to replace Sir John last month. The company said the search for a new chairman was continuing and it would consult with significant shareholders before picking a permanent replacement for My Hayward.

Glencore used to have eight directors plus the chairman before the takeover of Xstrata, so it is likely that the enlarged company will aim for a similar number. The appointments on Wednesday bring the total number of directors to seven, suggesting that the company is still looking for an additional director, possibly a woman, and a chairman to replace Mr Hayward.