Exec pay is easier to bear if your bum’s also in the butter
No surprise - given the rise in Anglo’s share price - that 92% of shareholders approved the remuneration policy
The days of embarrassingly large votes against its remuneration policy appear to be well behind Anglo American. At the mining group’s annual general meeting this week a mere 8% of shareholders voted against executive remuneration. This reflected an improvement on the previous year’s 10%, which in turn was an enormous improvement on the 42% opposition at the 2016 AGM.
The latest vote was particularly impressive given that CEO Mark Cutifani’s total package more than doubled in 2018 thanks to the vesting of shares that had been awarded to him in the depths of the commodity slump three years ago.
The recent hefty increase in the Anglo share price meant Cutifani’s long-term incentive package was worth £10.2m (about R192.7m), compared with £3.2m (about R60.4m) the previous year.
It would have been considerably higher had it not been for the introduction in 2017 of a cap on the value of 2016 long-term awards. This lopped a hefty £6.4m (about R120.9m) off Cutifani’s award. Without it, his long-term portion would have been a staggering £16.6m (about R313.5m).
No doubt shareholders were impressed by evidence of a commitment to ensure executives don’t unduly benefit from share price volatility, which in mining is extreme. It must help that shareholders also benefit from the share price’s strength – just as they suffered from its weakness in 2016.
Although some shareholders were disappointed with the final dividend payment for 2018 and others may have been worried about the five fatal incidents, management believes the progress it has made to improve productivity justifies its remuneration policy. Unit costs have decreased significantly and mining margins rose to 42% from 30% in 2012.