Clarke, who stands to receive 12 months' salary and benefits worth a total of $950,000, is to be replaced by Emmanuel "Manny" Roman, one of trio behind GLG, the hedge fund which Man acquired two years ago.
The 53-year-old will leave Man, where he has worked for nearly 20 years and became chief executive in 2007, in February after the full-year results.
He took home $7m last year – although his future payouts could be restricted by the bank's share price. He has millions of share options which, when they were awarded, were expected to provide him with multimillion pound profits, but with the shares now at just 78p the 3m options he has at 280p and the 3.7m he has 275p are "under water".
He also has 650,000 shares in long-term performance plans due to pay out in the coming years although these are subject to performance criteria which were not met last year. Clarke is already drawing his pension. There are another 2m "share matching" awards which could pay out in coming years.
The shares, which have lost more than 40% since the start of the year, rose 5% after his retirement was announced.
Shareholders have been concerned about progress at Man, whose "black box" investment system, AHL, has been suffering from a torrid performance and in recent weeks there have been grumblings about the need for change at the top.
The company, which dropped out of the FTSE 100 in June because of its share price underperformance, said that a "rigorous evaluation" process of both internal and external candidates had led to the decision to name Roman for the top job.
Roman, who did not immediately join the board following the acquisition of GLG, is on a basic salary of $1m and has not taken bonuses recently. He is now expected to participate in bonus schemes and said on Monday he was "confident that we can deliver significant long-term value".
"These are tough times for the asset management industry, as for many parts of the financial services," he said.
Changes in the boardroom were first signalled in June when the finance director, Kevin Hayes, was replaced by 34-year-old Jonathan Sorrell, one of the sons of WPP boss Sir Martin Sorrell. The younger Sorrell has initially joined as head of strategy and is now expected to slash costs to rebuild the performance of Man, which had once been part of a centuries' old sugar broker.
Much of the problems are being traced back to AHL, which executes trades by computer rather than human intervention, and has in the past contributed as much as two thirds of the group's revenue.
