The median salary paid to chief executives at Australian mining companies fell by 12 per cent over the past two years, and is set to decline further after recent cost-cutting moves by the likes of BC Iron, Sundance Resources, Paladin Energy and Poseidon Nickel.
The median salary paid to chief executives at Australian mining companies fell by 12 per cent over the past two years, and is set to decline further after recent cost-cutting moves by the likes of BC Iron, Sundance Resources, Paladin Energy and Poseidon Nickel.
The median cash salary, including superannuation, paid to mining chief executives in the year to June 2015 fell to $438,000, according to a survey by corporate advisory firm PCF Capital Group.
After adding in equity-based payments, the median remuneration was $561,291 – a decline of 9.1 per cent.
The average remuneration last year was substantially higher than the median, at $824,489.
This number was bumped up by a handful of very large packages, notably BHP Billiton boss Andrew Mackenzie ($6.9 million), Newcrest’s Sandeep Biswas ($5.6 million), and Fortescue Metals Group’s Nev Power ($6 million).
The survey encompassed 108 Australian mining companies with a June 30 balance date.
The trend towards lower remuneration has been confirmed over the past month, with several Perth-based companies announcing cost-cutting measures.
BC Iron said chief executive Morgan Ball had signed a new employment agreement that includes a 15 per cent cut to his fixed remuneration (salary plus super) to $602,250.
The company has also resolved that payment of cash bonuses under its incentive schemes would be suspended.
“Morgan’s preparedness to materially vary his salary is reflective of his commitment to act in the interests of the company at a time where restraint is being practised throughout the enterprise and is highly commendable,” chairman Anthony Kiernan said.
Sundance Resources announced last month that managing director Giulio Casello had agreed to take a further 20 per cent reduction in his base salary, on top of the 10 per cent reduction applied last December.
The company’s non-executive directors have agreed to similar reductions, except chairman Wal King, who has accepted a much larger 60 per cent reduction.
Cutting salaries is just one measure adopted by mining companies to preserve cash.
Poseidon Nickel, for instance, has cut the salaries of its board members, chief executive David Singleton, and senior management by 20 per cent; in addition, the board members are taking their fees in scrip rather than cash.
Another increasingly common practice is to thin out the executive ranks.
Atlas Iron expects to save about $1 million per year after former managing director Ken Brinsden moved to a non-executive role and chief financial officer Brian Lynn resigned.
Paladin Energy expects to cut the aggregate cost of board compensation by 60 per cent after reducing the number of directors and remuneration per director.
The biggest contributor to this was the retirement of managing director John Borshoff, who was paid $1.6 million last year, and the appointment of interim chief executive Alexander Molyneaux on a package equivalent to $415,000 per annum.
Paladin has also appointed Ranko Matic as a non-executive director and company secretary, following the resignation of Gillian Swaby.
Mr Ratic fills the same roles for a number of listed mining companies.