Paper money creates fortunes

EXECUTIVES of the paper and packaging company Mondi appear to have gone into the business of printing money, judging by the way they earned some of the biggest pay packages in South Africa in the year to March 2013.

CEO David Hathorn’s salary ballooned by 330% as he pulled down just over R76-million for the year.

Peter Oswald, head of European and international business, ranked fourth in the best-paid stakes with a salary of just more than R53-million.

Mondi’s chief financial officer, Andrew King, was in 20th place with a total salary package of R30.5-million.

“The Mondi management team are held in high regard, particularly as they have delivered an almost 480% total return to investors over the past five years in what has been a challenging period in the European paper sector,” said Jeffries analyst Justin Jordan.

This is the first time that directors from the paper, pulp and packaging industry have made it to the top 20 salary earners of the Sunday Times Rich List, kicking sand in the faces of their peers in investment banking, mining, retail, tobacco and luxury goods.

The bulk of Mondi directors’ pay packages were realised through gains on shares, not in straight salaries.

Since Mondi’s unbundling from Anglo American in 2007, the company has experienced a 120% rise in its share price, and earnings grew by an average of 20% annually for the past five years. Mondi operates in 30 countries and has a market value of about R84-billion.

Over the past year, its share price grew by about 90%, making it one of the better-performing companies on the JSE. Rival paper company Sappi saw its share price drop 17% over the year.

Sappi CEO Ralph Boettger took a 15% pay cut from the previous year. Nevertheless, he was still 124th on the best-paid list, taking home R12.2million.

Richemont CEO Richard Lepeu was number two on the list, taking home close to R69-million. Coming in third was Investec’s Hendrik du Toit, who received a bonus of R51.3-million and a total package of R56.5-million.

For executives in an industry that claims margins are being squeezed and they cannot increase worker wages to R12 500, the bosses of gold mining companies did not do too badly.

Gold Fields CEO Nick Holland earned the fifth-biggest salary in South Africa (R45-million), a 15% increase and about 5 600 times more than the average mineworker.

His counterpart Mark Cutifani (at AngloGold Ashanti during the period under review) was not far behind in seventh place with a salary package of R43-million, a 55% increase from the previous year. Cutifani’s chief financial officer and successor, Srinivasan Venkat, pocketed R36-million, making him number 11 on the list.

These salaries appear to be quite generous considering that the two gold mining companies saw their share prices drop by more than 40% this past year.

As head of British American Tobacco, Nic Durante raked in slightly more than R44-million, placing him sixth. The company has about 85% of South Africa’s smoking market.

Coming in eighth was Shoprite boss Whitey Basson with a pay cheque of almost R41-million.

A golden handshake of R19-million saw Avusa’s (now Times Media) Prakash Desai take ninth spot on the earner’s list. Desai was smiling all the way to the bank with a total package of R40.1-million — a 651% increase on his cheque the previous year.

Rounding out the top 10 earners in South Africa was beer man Graham Mackay, who earned R39.8-million for his interests in SABMiller and Tsogo Sun.