Anglo bonuses called into question
Activist builds on Cutifani’s criticism of group’s performance
SHAREHOLDER activist Theo Botha has called for an overhaul of the Anglo American remuneration committee following last week’s criticism of the mining group’s performance by newly appointed chief executive Mark Cutifani.
“It must now be obvious to everyone that the bonuses paid to the former senior executives were not aligned with shareholder interests,” said Botha, who has travelled to London on several occasions to attend the group’s annual general meetings. Botha has frequently raised concerns about Anglo’s remuneration policies and structure.
Botha told Business Report yesterday that every year since 2007, when Cynthia Carroll was appointed chief executive, her basic salary was more than doubled by bonus payments, “with the exception of 2012”.
In 2007, Carroll’s bonus was equivalent to 142 percent of her salary; in 2008 her bonus was 121 percent of her salary; in 2009 it was 134 percent; in 2010 the bonus was equivalent to 146 percent and in 2011 Carroll’s bonus was equivalent to 165 percent of her salary.
In addition to annual bonuses Carroll and René Médori, Anglo’s chief financial officer, also benefited from Anglo’s long-term incentive plan. In 2011 this was worth just over £3 million (R45m at yesterday’s rate) to Carroll taking the total value of her remuneration package for that year to £8.1m.
Médori’s package was worth £5.1m in 2011.
There was a significant drop off in 2012 when Carroll’s bonus for the year was reduced to 60 percent of her basic salary. After adding in a longterm incentive award the total package was bumped up to £3.2m. Médori’s package was valued at just over £2m.
Botha said he welcomed the improved disclosure of the details around Carroll’s performance assessment contained in the financial 2012 annual report and noted that it had been impossible to determine how such “generous bonuses” had been awarded previously.
Addressing last year’s AGM, Botha referred to the 165 percent bonus paid for 2011, which was just short of the maximum bonus payable of 175 percent.
“Earnings per share are down, fatalities have increased from 15 to 17, my main concern here Mr Chairman is that shareholders actually cannot hold the remuneration commit- tee to account based on the fact that we don’t have adequate information in terms of the key performance indicators (KPIs); we don’t have the weightings of the KPIs and then we don’t actually have a report back to say that the targets you set at the beginning of the year have been achieved. How do shareholders hold the board to account on the issue of the executives’ bonuses?” Botha said at the AGM.
Part of Carroll’s strategy had been to invest in developing the group’s project pipeline and make acquisitions. Last week Cutifani said he would like to save about $300m (R3 billion) a year, dramatically cutting back the project pipeline. He would also consider selling assets “at the right price”.
He added that Anglo’s operating model was not effective and would have to change.