South African mining company boss scores R37 million bonus
Anglo American boss, Mark Cutifani, has received a total salary of R64 million for the 2016 financial year – higher in pound terms, but lower in local currency due to the strengthening rand.
The mining group published its annual report for 2016, showing that Cutifani took home a higher total package of £3.996 million for the year, up from £3.462 million in 2015.
Cutifani’s basic salary did not increase between 2015 and 2015 (£1.26 million), however, he did see a big bump in his cash and share bonus to £2.32 million, from £966,000 in 2015.
The company reported a massive turnaround in 2016, delivering a first pre-tax profit in five years, while also turning a R4.1 billion operating loss in 2015, into a $1.7 billion operating profit.
“During a year of continued slow global economic recovery and low commodity prices on average, Anglo American executed significant cost and productivity improvements, and in the second half benefited from sharply increasing prices for several of its products. This combination enabled a remarkable sector-leading recovery for Anglo American,” the company said.
Anglo American operates 23 mines in South Africa, and boasts 61,000 employees.
In rand terms, Cutifani’s pay has diminished, as the current rand/GBP exchange rate sits at R16.01 vs the R21.50 recorded during conversions made last year.
In it’s annual report published on Monday (13 March 2017), Anglo American’s remuneration committee said it will make changes to the way directors’ salaries are paid – specifically surrounding long-term incentives.
Previously, shareholders have criticised the company for handing out a large number of shares to Cutifani and other executives – particularly while the company underperformed in a tight commodity market.
At a 2016 shareholder meeting, 40% of shareholders voted against the remuneration report in protest, spurring the changes.
From 2017, the company will reduce the maximum amount of shares that can be awarded to executives from 350% of salaries, to 300%. This will be introduced along with a cap on other awards.
For Cutifani, this translates to a maximum cap of £13 million (R208 million) from his 2014, 2015 and 2016 long-term incentive awards.
These changes will be voted on at Anglo’s shareholder meeting at the end of April which, if approved, will be in place until 2020.
Anglo American was one of the biggest stock winners of 2016, seeing its share price jump 200% in value between the start of the year and its close.
Highly paid CEOs
Cutifani is one of the highest paid chief executives in the country, due in large part to the fact he earns in pounds, which carries an incredibly favourable conversion rate.
Other chief executives also benefit from earning in foreign currency, such as BHP Billiton’s Andrew Mackenzie, who took home $2.241 million (R29.4 million) in 2016.
While also losing out in rand terms due to the strength of the local currency, Mackenzie’s salary was also half his 2015 salary in dollar terms, reflecting BHP Billiton’s poor performance last year, the company said.
In contrast, British American Tobacco CEO, Nicandro Durante saw his salary climb even higher in 2016, jumping to £7.63 million (R122 million) a massive leap from his £4.54 million pay cheque in 2015.
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