Two announcements from JSE-listed mining companies in the last week have revealed how just four executive directors – two CEOs, a CFO and a COO – will receive in excess of R700 million in guaranteed compensation for last year and this.
Almost half of this figure – or an astonishing R300.3 million – was the total remuneration for Sibanye-Stillwater CEO Neal Froneman for last year.
The bulk of this (R264 million) was in the form of conditional share awards made to the gold, platinum and lithium miner’s top employee. This includes adjustments for accruals not settled, those settled in the year, as well as movements on these in the year.
Excluding all of these, Froneman’s total single figure remuneration for the year was R291.6 million.
By comparison, his total package was ‘just’ R62.7 million in 2020 (which included R21.3 million in conditional share awards).
Froneman has a dual-service contract where roughly two-thirds of his remuneration is in rands (R193.8 million) while the remainder is in US dollars (totalling R106.5 million). Depending on the performance of the company this year, he may end up being paid a figure similar to that in 2021.
CFO of Sibanye-Stillwater Charl Keyter had remuneration totalling R147.2 million last year. A full 87% of this comprised conditional share awards (R128 million). Keyter had total remuneration of R30.9 million in 2020.
A rather curious announcement was made on Tuesday by Royal Bafokeng Platinum (RBPlat) which is the subject of a bidding war between Impala Platinum (Implats) and Northam Platinum.
RBPlat said that while its CEO Steve Phiri had advised the board of his intention to retire at the 2022 AGM, it had managed to secure his services for a further 12 months on a fixed-term contract to ensure “organisational stability”.
COO Neil Carr also retired on April 7 at the AGM and has been retained on the same basis as Phiri.
The retainment is not the curious part. RBPlat says that in terms of Phiri’s retirement, he will be “entitled to a pro-rated accelerated vesting of his scheme shares, after assessment of the applicable performance conditions … but will further be entitled to a discretionary accelerated vesting of the balance of the shares which will be subject to the required assessment of the additional performance conditions, in terms of the contract”.
This means 378 396 RBPlat shares will vest, while a further 356 091 shares will also vest, subject to further performance conditions.
In total, these 734 000 shares are worth R112 million at the closing price of RBPlat on Tuesday.
In Carr’s case, his shares (those that have vested – under acceleration – and those subject to further performance conditions) total 440 000 and are worth R67.5 million at Tuesday’s closing price.
The RBPlat remuneration committee is being incredibly graceful and generous with these awards. One assumes that at some point in the next 12 months, some sort of resolution will be found and either Implats or Northam will end up owning it.
But RBPlat says the fixed term contract for the next year may not be sufficient: “The parties may seek to extend the contract in the case that a satisfactory conclusion of the corporate action and subsequent business continuity has not yet been reached after the 12-month period, and further defer the benefits in relation thereto.”
Phiri and Carr were paid R25.25 million and R16.48 million respectively last year. In terms of the guaranteed remuneration portion of this, they will almost certainly receive a similar or higher amount for 2022 in addition to those up to R180 million in accelerated vested shares.
While commodity prices are booming, there will likely be strong criticism of this level of remuneration – at Sibanye-Stillwater the numbers are simply eye-watering, while at RBPlat, the company is ensuring that its key executives are able to have the majority of their shares vest before either Implats or Northam buys out other shareholders and delists the company.
The total remuneration for executive directors and prescribed officers (as disclosed in the annual report) at Sibanye-Stillwater was R804.98 million in 2021, while the same figure for far smaller RBPlat is R79.948 million.
It must be mentioned that gold miners at Sibanye-Stillwater remain on strike for over 45 days. The strike was declared on March 9 and the 30 000 workers are holding out for a better offer than the original R700 a month, which was revised to R850 earlier this week.
The mining group paid a total of R26.2 billion in salaries and wages last year.