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Big pay day at Gold Fields

Share sales influenced by various circumstances such as ‘personal financial planning’.
Fifteen executives sold R527m worth of shares they received a few weeks earlier as part of a performance incentive programme. Image: Supplied

In what has become something of an annual event, in February top executives at Gold Fields bagged enormous profits by liquidating huge tranches of shares awarded to them as part of their long-term incentives.

This year the executives sold off half a billion rands worth of shares, as the Gold Fields share price enjoyed the benefit of a surge in the gold price.

In early February the international gold miner, with operations in SA, Australia, Ghana and Peru, reported a fourfold increase in headline earnings.

A strong increase in the gold price boosted 2020 earnings to $729 million (R10.9 billion), up from $163 million (R2.4 billion) the previous year.

Last month, 15 Gold Fields executives sold R527.1 million worth of shares they had received a few weeks earlier, as part of the long-term bonus awarded in terms of the group’s three-year performance incentive programme.

The value of this year’s share sales was considerably enhanced by the stronger gold price, which surged to a near record high of just over $2 000 (close to R30 000) an ounce in August 2020, dragging the Gold Fields share price up behind it.

The share price peaked at around R255 last August but has since drifted down to R125.

Outgoing CEO Nick Holland was one of the largest beneficiaries of the annual sale, bagging R114.8 million when he sold 914 324 shares last month.

At the end of December Holland’s stock of Gold Fields shares was boosted by an additional 1 160 664 through the vesting of 244 574 of ‘matching’ shares and 916 090 performance shares. The matching shares were awarded to Holland in terms of the group’s requirement that he hold 200% of the value of his annual guaranteed remuneration package in shares.

The group’s financial 2019 annual report reveals that Holland’s total annual remuneration for that year, including long-term incentives, was valued at $6.6 million (R98.6 million).

Read: Outgoing Gold Fields CEO: Worker fatalities are my biggest regret

Other executives who benefitted from the strong gold price when they sold out in February include:

  • Alfred Baku (R78.1 million)
  • Paul Schmidt (R63.9 million)
  • Luis Rivera (R50.1 million)
  • Stuart Mathews (R41.3 million)
  • Brett Mattison (R38.1 million), and
  • Taryn Harmse (R37.6 million).

Sven Lunsche, spokesperson for the company, told Moneyweb the share sales reflected “personal decisions depending on various circumstances like personal financial planning”.

He said that apart from the minimum shareholding requirement the company, does not enforce any specific actions once the shares have vested since they are now owned by the executives.

This will be the last year that Holland, who has confirmed that a “reasonable percentage” of his net worth is tied up in Gold Fields shares, will be required to disclose details of his trading. At the end of March he will be retiring from the company for which he has worked for 24 years; he has been CEO for the last 13 of those years.

Chris Griffith, former CEO of Anglo American Platinum, will take over from Holland.

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These payouts are the reason unions want above inflationary increases! Bonuses must be based on operational KPI’s and not the spot price of gold!

100% : a rising tide lifts all ships in the harbor.

All the hired help packages (all industries) should work on relative stock options. Strike price is determined by your share price and a basket of peers.

If the basket goes up 30% the strike price goes up 30%

If the basket goes down 30% the strike price goes down 30%

As a shareholder I have no problem paying the hired help oversized rewards if they delivered me an oversized return relative to what my other investment options were in that asset class / industry.

For some strange reason pay consultants and committees don’t like this concept…

Selling R500m of shares, that were received a few weeks earlier, as part of long term incentives?

Is long term a few weeks now?

Confusing hey…Maybe they meant shares vested few weeks ago

”Justice must not only be seen to be done but has to be seen to be believed”

J.B.Morton English Writer (1893-1979)

Whatever you do Goldfields – remember this – R&E wants back what it sees as its dues and is claiming around R43 billion from you – when this case goes to court!

The Citizen Report 04/11/2019 reads as follows:
There is as much as R43.6 billion at stake.

Gold Fields added a note to its financial statements under contingent liabilities to warn shareholders of the potential damages. It noted that R&E computed different claims, with the largest amount (the nearly R44 billion) based on the value of RRL and Aflease at the maximum share prices during the period under consideration.

An alternative claim is based on the prices of the shares at the time of the alleged theft plus any dividends that would have been received, as well as interest up to the date of a court ruling. The amount is provisionally calculated at R26.9 billion, according to the Gold Fields annual report.

The total claim against Gold Fields equates to between R376 and R609 per R&E share, but it is highly unlikely that the claim will be settled for anything near these figures if settled at all

And some lucky beneficiaries in the South Deep BEE deal are ten years in receiving their guaranteed “dividend” payments with another ten years to go. All off a mine that isn’t profitable, never has been and probably never will be.

This has to be one of the best deals ever negotiated in the history of finance.

If the South Deep BEE deal is the one negotiated by the Baleka Mbete / Ashwin Willemse consortium, it might be reversed.

The deal was obtained by blackmail. Mbete and Co threatened GFI that their new order mineral rights will not be granted – if this deal is not granted by GFI.

Reversed by whom? It’s been more than 10 years now and I’m not aware of any civil/regulatory action taking place.

End of comments.

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