Un­equal re­wards

BHP Bil­li­ton streets ahead of An­glo Amer­i­can

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA sikonathim@fin­week.co.za

BHP Bil­li­ton has con­sis­tently and mas­sively out­per­formed its clos­est peer – An­glo Amer­i­can – over the past five years. Since Jan­uary 2004 BHP Bil­li­ton has shown a cu­mu­la­tive 326% re­turn on the JSE against An­glo’s 154%. On the Lon­don Stock Ex­change the num­bers fall to 220% for Bil­li­ton and a BHP BIL­LI­TON CE Mar­ius Klop­pers is R9m richer af­ter ex­er­cis­ing his op­tions on 90 000 shares in the com­pany and sell­ing more than 43 000 of those to take care of the tax­man. The shares in the min­ing com­pany were awarded to Klop­pers two years ago as part of the com­pany’s in­cen­tive share schemes and are his re­ward for help­ing the com­pany beat its peers in terms of per­for­mance over the pe­riod. neg­a­tive 85% for An­glo.

The im­pres­sive per­for­mance by Bil­li­ton hasn’t helped Klop­pers’s salary if An­glo CE Cyn­thia Car­roll’s re­mu­ner­a­tion is used as a yard­stick. Klop­pers took home US$6,87m (R56m, ex­clud­ing share op­tions), while Car­roll was paid in ex­cess of R75m in both shares and ba­sic salary over the past fi­nan­cial year (see Fin­week, 7 May). The 90 000 shares (worth R17m) Klop­pers ex­er­cised were the only ones due to him over the past fi­nan­cial year, with an­other 27 582 (R5,2m) vest­ing in Au­gust. How­ever, that’s a pre-tax al­lo­ca­tion and be­comes about 40% lower post tax.

Klop­pers’s re­mu­ner­a­tion con­sists of a 28% ba­sic cash salary with the rest termed “at risk re­mu­ner­a­tion” linked to share­holder re­turns.

“Get out of the kitchen if you can’t take the heat.” It seems some of the direc­tors at food pro­ducer Pi­o­neer Foods are heed­ing that ad­vice with re­spect to their per­sonal in­vest­ments in the com­pany. A to­tal 250 000 shares has been sold by three ex­ec­u­tive direc­tors since the last week of May, with the lat­est in the sec­ond week of June. That just hap­pened to be on the eve of SA’s com­pe­ti­tion au­thor­i­ties’ bread car­tel and price fix­ing hear­ings against the com­pany.

The Com­pe­ti­tion Tri­bunal has set aside 10 days to hear the mat­ter from the sec­ond week

of June. If found guilty of il­le­gal ac­tiv­ity in al­leged car­tel ac­tiv­ity – fel­low ac­cused Tiger Brands and Premier Foods have al­ready owned up to their wrong­do­ings – Pi­o­neer stands to lose a max­i­mum 10% rev­enue for its 2007 fi­nan­cial year. Al­though it stands to lose up to R1,1bn it’s made no pro­vi­sion for any pos­si­ble fine.

That the com­mis­sion au­thor­i­ties have en­listed the help of in­di­vid­u­als that would have con­spired with Pi­o­neer Foods to fix bread prices, em­ploy­ees of Tiger Brands and Premier Foods, with in­side knowl­edge of the al­leged of­fence, haven’t fazed Pi­o­neer. “In­de­pen­dent le­gal ad­vice… in­di­cated a rea­son­able chance of a suc­cess­ful de­fence against all or some of the charges…” chair­man Boy Blanck­en­berg stated in its 2008 an­nual re­port.

The ex­ec­u­tive di­rec­tor of the divi­sion that stands ac­cused of the wrong­do­ing – Ter­tius Carstens, of Sasko – is the lat­est ad­di­tion to the list of sell­ers of Pi­o­neer Foods’ shares. Carstens sold 117 500 shares to raise R3,3m “in or­der to as­sist with the re­pay­ment of the debt re­lated to the ac­qui­si­tion of the re­main­ing 256 997 or­di­nary shares”. The op­tions were awarded at a strike price of 865c/shares. As at 30 Septem­ber 2008 (Pi­o­neer Foods’ fi­nan­cial year-end) Carstens owned 123 668 shares in the com­pany he’s served for 13 years.

The other (out­right) sell­ers were CE An­dré Hanekom and fi­nance di­rec­tor Leon Cronjé, who sold 30 000 of his shares for R855 000 early in June. While Hanekom stated per­sonal rea­sons for the sale of 100 000 shares, Cronjé didn’t give any rea­son for his sale of shares.

Al­though direc­tors owned al­most 2% of the com­pany’s shares in Septem­ber, in­vestors might do well to re­mem­ber that ever since Pi­o­neer Foods listed on the JSE last year, the only time any of its direc­tors bought its shares was through a rights of­fer a few months af­ter list­ing.

Carstens was by no means the only seller of note last week. At construction group Ste­fanutti Stocks, non-ex­ec­u­tive di­rec­tor Bridgman Sit­hole sold 500 000 of the shares held by his Mop­utso In­vest­ments in the com­pany to raise R5,9m. Mop­utso owns around 10% of Ste­fanutti Stocks. “Peo­ple have to even­tu­ally make some money out of their in­vest­ments,” says a Ste­fanutti di­rec­tor we spoke to. He con­firmed the sale rep­re­sented “only a tiny” part of Mop­utso’s shares in the com­pany.

Above the rest. Mar­ius Klop­pers

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