I deserve my R300m
CEO defends fat pay packet as strike drags on amid union fury
● The CEO of mining giant Sibanye-Stillwater, Neal Froneman, has defended his R300m remuneration for the 2021 financial year and says the company will not be bullied into unsustainable wage demands at its gold mines.
Froneman, who has been at the helm of the precious metals company since 2013, received a whopping R300m after a longterm incentive awarded in 2018 topped up his package.
News of the windfall led to a falling out with striking unions at Sibanye-Stillwater, who accused the CEO of benefiting on the back of miners. It also been slammed by experts and created a political headache for President Cyril Ramaphosa, who was booed at a May Day rally in Rustenburg.
The company is into its third month of a volatile strike that has pitted unions against management.
In an interview with the Sunday Times, Froneman said the problem with executive remuneration is that it is not well understood.
He said his salary and bonuses and even long-term incentives are not determined only by non-executive directors and remuneration specialists, they are also benchmarked against what peers are paid.
“I had nothing to do with my remuneration. Only a small portion, I think R28m in this case, is a cash remuneration that is paid by the company. The 270-million of shares is a cost to the shareholder.”
He said shareholders approved the remuneration, and he supports remuneration being transparent.
“If you have not delivered and you receive remuneration like this, then you should be embarrassed, but to be honest the Sibanye team has shot the lights out. Our gold division only had five years of life. We have still got 10 to 13 years of life. We have saved 30,000 jobs.”
Froneman said the group had substantially outperformed world-class companies including Barrick Gold, Newmont, Impala Platinum, Gold Fields and Anglo American Platinum.
“Lonmin was going to hit the wall. We saved 20,000 jobs at Lonmin, and not only that, Lonmin pays for itself now every four or five months. Our market cap was R15bn in 2013, it is R150bn now. Compared to companies like Barrick Gold or any highquality company, we have outperformed them.
“This is not unfair remuneration. It is also an incentive that is at risk. If we did not perform, we would not receive this. It is not that it is a guaranteed return. It is a very important difference.”
The company has grown from having 36,000 employees in 2013 to almost
85,000 in 2021, with wages and salaries increasing from R6bn to R26bn.
Sibanye acquired Lonmin, which was the world’s third-biggest platinum producer, in a transaction that was described at the time as a lifeline for Lonmin, which was struggling to keep afloat.
Lonmin owned the Marikana mine, which was where mineworkers were massacred almost 10 years ago when police opened fire, killing 34 striking mineworkers on August 16 2012. Ten others, including policemen and security guards, were killed in violent clashes in the days preceding the massacre.
In the past two years a commodities price run has been a boost for platinum group metals (PGMs) and has been a tailwind for mining companies, including Sibanye.
Froneman said the performance of the shares was not a matter of luck.
“What I do not want you thinking is that we got lucky. We did not get lucky. We actually chose [to invest] back in 2017 when PGM prices were at a low. We could see the potential for commodity prices increasing. We convinced our board and shareholders to make this entry. So we should get the benefit of these higher commodity prices. It is not luck.”
He was referring to the company’s decision to diversify from gold. In addition to Lonmin, Sibanye bought Anglo American Platinum’s Rustenburg operations, Aquarius Platinum, and the Stillwater operation in the US to create its PGM portfolio.
At its gold mines, more than 30,000 members of the National Union of Mineworkers (NUM) and Association of Mineworkers and Construction Union (Amcu) have been striking since March 10 for better pay. The unions want a R1,000 a month salary increase for entry-level workers. The company has refused to offer more than R850.
Last week, mineral resources & energy minister Gwede Mantashe intervened, getting the two sides negotiating face-to-face for the first time since workers downed tools. Mantashe again facilitated meetings between Sibanye’s management and the leadership of NUM and Amcu this week.
NUM said Froneman’s pay bonanza was achieved on the backs of miners.
“If this is about deserved remuneration, mineworkers deserve to get a salary increase of R1,000 and bonuses,” said NUM spokesperson Sibonginkosi Mrhasi, who is leading the negotiations with Sibanye-Stillwater.
He said Froneman did not achieve success at the company by himself.
“It is workers who have pushed Sibanye to where it is today. It is the same workers who have been going underground on a daily basis, trying to push production since 2012.”
He said it was because of the workers that the company was able to expand, but it had still retrenched 5,000 employees during the period.
“It can’t be a one-man show. It is a collective contribution, it can’t be him alone who then smiles to the bank as an individual while thousands of goldmine workers have contributed on a daily basis to increasing production,” said Mrhasi.
Froneman told the Sunday Times he would not be bullied by union threats to embark on a secondary strike.
“This constant demand and threat of a secondary strike, and getting the government involved, those are bully tactics. That is not sitting around the table and discussing. Because we say no we are called arrogant. No is no.
“We have reached a point where our offer is final, and irrespective of who may try to facilitate what, the reality is that should we make an offer any higher we will affect the livelihoods of many people because we will affect the sustainability of our business.”
Professor Imraan Valodia, an economics expert at Wits University, said the issue is about having a fair and equitable pay system.
“We need remuneration systems where what the top earners earn has some kind of reasonable relationship with what the bottom earners earn. In many other countries, the ratio is something like 50 to one. That is the reasonable gap. Here the gap is just so huge that it is not reasonable.
“To my mind there is no reasonable justification when someone earns R300m in a year — no-one is adding so much value in the company that they can justify earning such an outlandish salary,” he said.
Valodia said SA has among the highest levels of inequality in the world and inequalities in pay systems are a big contributor to this.
Remuneration expert Laurence Grubb said R300m is a large number, especially when workers are striking for an increase.
“The optics are very bad. The timing of the disclosure hasn’t helped at all because of the unions digging in for their increases.
“We have to remember that government came up with the amendment bill proposed to the Companies Act sometime last year to try and regulate executive pay, but the recommendations were very poorly put together. The problem with this kind of disclosure is that it plays into the hands of people who want to cap executive remuneration, and globally that is never a good idea,” he said. In April Sibanye made a “final” offer for entry-level employees of a three-year agreement that would include a R50 livingout allowance and an R800 salary hike for a total monthly increase of R850.
The unions said they were prepared to cut their demand for a R100 monthly “living out” allowance for entry-level mineworkers by half, but would not lower their demand for a R1,000 a month salary increase. That would add up to a total monthly increase of R1,050.
Froneman said unions and management had met on Wednesday to try to find a resolution to the impasse.
“It was the first constructive meeting we have been able to have. I don’t want to say more than that.”
A union source, who declined to be named, confirmed the meeting with Sibanye management, a delegation from the department of mineral resources & energy and unions took place on Wednesday, when a new proposal was tabled by unions.
“The proposal is for a five-year wage deal instead of a three-year deal. The company said it will caucus and revert to the unions next week.”