A multibillion-POUND merger to create a new natural resources powerhouse was approved by shareholders but without paying a controversial multimillion-pound retention package to senior managers.

Commodities trader Glencore and mining giant Xstrata will merge under a £56 billion deal following months of wrangling.

Glencore shareholders backed the move yesterday, while Xstrata investors voted in favour of the deal as long as a £227 million pay deal for its top managers was not included.

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Xstrata later said the deal would go ahead without the retention package in a coup for Glencore chief executive Ivan Glasenberg, who will head the new firm.

Xstrata and Glencore – among the top 20 firms on the London stock market – will have operations in 33 countries and should be better able to compete against bigger rivals BHP Billiton and Rio Tinto once the deal completes.

The companies still need competition approval by the European Commission.

Sir John Bond, Xstrata chairman, said he would step down once a new independent chairman was found, after the incentive package was voted down.

Xstrata chief executive Mick Davis added that he regrets the decision of shareholders not to approve the retention arrangements as it will introduce "un-necessary risks" to the merged company's future value proposition.