SA fund managers vs extractives CEOs over (over)pay

Thursday, 31 October, 2013

A quick one to draw your attention to this article on Mineweb (pulled from Bloomberg) on the "fury" of South African fund managers ("overseeing almost $180 billion in assets") as they raise their voices in an attempt to get mining companies to curb executive pay at a time when shareholder returns are dwindling. Not a good market and probably not a surprise move to many. The article:

"The industry “is going through a very, very hard period,” Fidelis Madavo, who helps manage about 1.4 trillion rand ($140 billion) at Public Investment Corp., South Africa’s state pension fund, said at a conference in Johannesburg yesterday. “Costs are going up double digit, money is not coming in, yet we are seeing a big, big rise in executive pay. We have been talking to CEOs individually on this.”"

A few interesting stats follow: pay for CEOs at South African mining companies increased 12-fold in the decade to 2012, while in the same period dividends per share dropped 25%. Michael Schroder, Old Mutual Plc fund manager, picks out Gold Fields Ltd. as a critical example. Gold Fields gave CEO Nick Holland a 39 percent pay rise to 45.3 million rand in 2012, when the shares fell 17 percent (Holland’s pay included salary, bonuses and long-term incentives accumulated in previous years).

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NB in the interests of us providing some balance from our own admittedly tight niche, our survey of publicly available information on extractives CSR had the following to say about Gold Fields: 

"Hugely impressive CSR reporting with extensive CSR projects; large list of case studies with much detail, and an impressive collection of videos, clearly archived by country. A News section also aims to keep CSR projects up to date."

So from our POV somebody at Gold  Fields is clearly earning their cheque...

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Back to the article, which concludes that this has become a major issue and one on which investors are likely to have a pretty significant effect in the near to mid term future.  While we also learnt today that Africa’s set to become a tightly integrated growth pole, news from SA suggests that on the other  hand huge packages may become a thing of the past.

http://www.mineweb.com/mineweb/content/en/mineweb-political-economy?oid=...