R140 million pay cut for South African mining boss

 ·29 Apr 2024

Sibanye Stillwater CEO Neal Froneman received a R56 million payday in 2023 – a significant drop from the R291 million he received in 2021.

Froneman recently said that the fall of Platinum Group Metals (PGMS) prices had the most significant impact on Sibanye’s business following a post-Covid boom.

The price of PGMS dropped significantly amid destocking from the auto industry and weaker-than-expected demand from China.

PGMs are primarily used in catalytic converters in internal combustion engines (ICE) to reduce their emissions. However, the rise of electric cars has called into question the need for a tool that reduces emissions.

For the financial year ended 31 December 2023, the group reported a R37.9 billion loss after taking an impairment against its US palladium mine.

Amid the group’s financial woes, it said it laid off 2,600 workers in February. This was to ensure the sustainability of its South African PGM operations.

However, the jobs bloodbath is set to continue, with the group again entering into Section 189A consultations earlier this month.

4,000 jobs in South Africa are on the line in the latest set of retrenchments, with the group hoping to restructure its gold operations and Southern Africa region services functions.

The group’s executives also felt the pain amid the group’s struggles, with the total single-figure remuneration among the ten highest-ranking executives dropping from R795 million in 2023 to R588 million in 2022 and then R235 million in 2023.

Froneman’s pay has often been a point of contention, with the CEO earning an eye-watering R291 million in single-figure remuneration in 2021, even if a large amount of this was linked to long-term share incentives awarded in 2018.

The figure then dropped to just over R198 million in 2022 before hitting R56 million in 2023.

The pay of the group’s 10 senior executives (R’000):

ExecutivePosition 2021 2022 2023
Neal FronemanChief Executive OfficerR291 582 R198 032R56 334
Charl KeyterChief Financial OfficerR143 428 R87 482R25 701
Charles Carter*Chief Regional Officer: AmericasR17 008R24 322
Dawie Mostert**Chief Organisational Growth OfficerR71 734 R50 765R14 513
Laurent CharbonnierChief Commercial OfficerR23 472 R24 102R23 548
Lerato LegongChief Legal OfficerR7 679 R9 553R10 760
Mika Seitovirta***Chief Regional Officer: EuropeR245R15 899R23 971
Richard StewartChief Regional Officer: Southern AfricaR83 011R60 125R19 947
Robert van NiekerkChief Technical OfficerR114 686R78 632R21 856
Themba NkosiChief People OfficerR58 648 R46 480R14 369
TotalR794 485R588 078R235 321
*Assumed Role in May 2022 | **Left the group in August 2023 | *** Assumed role in December 2021 |

Not all bad

Amid the group’s financial woes after the last year, its share price dropped from around R40 a share a year ago to roughly R22 per share today.

That said, Froneman was relatively unscathed by the drop in share price after exercising a put option.

A put option is a contract which gives the option buyer the right, but not the obligation, to sell a specified number of shares at a predetermined price within a stipulated time frame. 

The predetermined price at which the put option buyer can sell the underlying security is called the strike price. 

On Tuesday, 5 March, Froneman exercised his put option at a strike price of R66.24 when the share price was just around R18.00.

The last time the share price was at the R66 mark was in March 2022.

The put option pocketed Froneman R96.38 million.

Despite Coronation stating that the PGM sector is a value trap amid the rise of electric vehicles, Froneman still believes that the cycle will turn in the next 6 to 12 months as interest rate cuts will increase demand for ICE vehicles.

Read: We underestimated how bad things really were in South Africa: CEO

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