Is $1,500 per day plus all reasonable expenses a good rate of pay for the top executive at a junior mining company in the midst of a cost-cutting drive? Read Business News' latest quarterly salary survey to learn more.
Is $1,500 per day plus all reasonable expenses a good rate of pay for the top executive at a junior mining company in the midst of a cost-cutting drive?
That’s what Dragon Mining has agreed to pay newly appointed executive director Brett R Smith while he undertakes a review of the company’s operations, which are focused on Scandinavia.
His appointment comes after Dragon agreed to cut its chairman’s fee from $100,000 to $60,000 and non-executive director fees from $50,000 to $30,000 to “make clear the new board’s commitment to cost saving initiatives being undertaken by the company”.
When Mr Smith’s daily pay is converted to an annual salary it amounts to $390,000, putting him ahead of many of his peers in the junior mining sector.
More pointedly, however, it is a lot less than ousted managing director Kjell Larsson was paid – his three-year contract entitled him to annual remuneration of $579,558 and a car valued at up to $71,343.
That kind of salary package is becoming a rarity as listed companies look for cost savings.
If there were an award for thrift it would go to Mali-focused gold explorer Oklo Resources, which in January recruited Ian Spence as chief executive.
Mr Spence agreed to join the company on a reduced salary while Oklo “is still establishing itself from a very low capital base”.
He has agreed to a fixed remuneration of $10,000 per month (plus super), equating to $120,000 per annum.
The big upside for Mr Spence comes from the granting of 20 million three-year share options exercisable at 1 cent – about double the current price.
Oklo is not alone in putting its chief executive on a discounted salary, though the starting point for the discount varies widely.
Rare earth project developer Peak Resources recruited Darren Townsend as its managing director in January.
His normal salary will be $400,000 a year (including superannuation) but he will initially spend just 75 per cent of his normal working hours on Peak matters. Hence his remuneration will be $300,000/year.
Mr Townsend also has big equity upside, after the company granted him 7.5 million share options and 5 million performance rights.
In addition, his salary payments are split 50:50 between cash and shares.
Australian Oil Company managing director Gary Jeffery has agreed to the same 50:50 split, while Galaxy Resources’ Anthony Tse and Latin Resources’ Chris Gale have also agreed to take part of their salaries in the form of shares.
The cost cutting that was a feature of last year has continued to work its way through the market in recent months, both for new and continuing chief executives.
It’s a similar story outside the mining sector.
Sweetening this pay cut was the introduction of a cash-based incentive scheme and the issuing of 10 million “continuous employment based” shares.
The largest of all the WA chief executive salary packages announced in the past three months was by oil producer Otto Energy, which fittingly also has one of the largest market valuations.
It promoted chief financial officer Matthew Allen to chief executive on a fixed salary of $475,000/year.
The attached table shows that market cap is a very rough guide to the salary packages listed companies are likely to pay.
Mr Thomas will be paid an annual remuneration of $425,000 (plus super). In addition he will be paid a $100,000 bonus after 12 months in the job and may be paid an annual performance bonus up to 40 per cent of his base salary.
During 2013, OTOC was one of the few companies to award a big pay rise. Former chief executive and major shareholder Adam Lamond – who has taken a new strategy role following the appointment of Mr Thomas – was awarded a 29 per cent pay rise last year to $485,000.