FEATURE: Salaries have come under huge pressure during the past year as widespread cost cutting takes its toll on executives’ take-home pay.
Salaries have come under huge pressure during the past year as widespread cost cutting takes its toll on executives’ take-home pay.
Executive salary cuts 2013
-10% John Borshoff (Paladin Energy) $1,380,240
-15% Jeff Quartermaine (Perseus Mining) $722,500
-23% Troy Hayden (Tap Oil) $500,000
-3% Raleigh Finlayson (Saracen Minerals) $485,000
-20% Paul Kitto (Ampella Mining) $450,757
-25% Paul Benson (Troy Resources) $405,000
-20% Steve Parsons (Gryphon Minerals) $400,000
-10% Marcus Flis (Royal Resources) $360,012
-30% Chris Reed (Reed Resources) $295,000
-37% Nick Di Latte (Diploma Group) $295,000
-40% Stuart Pether (Kula Gold) $213,000
-50% Tony Lofthouse (Thundelarra) $150,000
A quick look at the salaries of chief executives who renegotiated their salaries in Western Australia in 2013 clearly reveals the challenges of the past year.
Widespread belt-tightening across WA’s resources sector put pressure on remuneration reports, with executives’ salaries the first thing on the chopping block for companies seeking to cut costs.
Business News research found 13 out of the 16 chief executives to renegotiate their base salary over the past 12 months were forced to take pay cuts – some as high as 50 per cent.
The uranium miner announced midway through last month that Mr Borshoff had negotiated a one-year extension to his contract, but his pay was reduced 32.5 per cent to $1.38 million.
Mr Borshoff has twice taken pay cuts in recent years – a 10 per cent cut in October to his current pay level, and a 25 per cent cut in December 2011, which took his base salary down to $1.53 million, from $2.04 million.
Despite the cuts, Mr Borshoff remains one of the state’s top-paid executives, ranked 13th on the Business News list, with options, bonuses and superannuation taking his total remuneration north of $2.5 million.
The depressed state of the uranium market was similar to that experienced in the gold sector.
With the price of spot gold trading under or around $US1,300 for much of the second half of the year, WA gold producers were on the frontline of reining in costs, with directors’ salaries an easy target.
Junior gold exploration firms Kula Gold and Ampella Mining also took the knife to their respective CEO’s salaries, with the base pay of Kula’s Stuart Pether reduced by 40 per cent, to $213,000, while Ampella’s Paul Kitto saw his pay reduced by 20 per cent to $405,000.
Fellow junior explorers Saracen Minerals and Gryphon Minerals were not immune to the cost cutting, with bosses Raleigh Finlayson and Steve Parsons taking 3 per cent and 20 per cent pay cuts, respectively.
Mr Parsons also gave up a $650,000 bonus payment.
Gold producer Perseus Mining implemented a raft of cost-cutting measures in an effort to reduce its overheads by 15 per cent.
Perseus said in September the initiatives were having the desired effect, reporting it would meet its gold production guidance as well as flagging improved performance in coming months.
Mr Hayden’s new salary is $500,000.
New faces, mixed bag
It was a similar story for new appointments, as research by Business News found just four out of 14 appointees earning more than $400,000 as base salary received packages higher than the executive who preceded them.
In June, Brumby Resources chairman Geoff Jones was appointed the successor to Joe Ricciardo at GR Engineering Services on a base pay rate that was more than $120,000 higher than Mr Ricciardo, who transitioned to chair the company’s board.
Remuneration moves in the mining services sector, however, were less rosy.
Emeco Holdings’ new boss, Ken Lewsey, received a base salary package worth about $70,000 less than previous chief Keith Gordon, while VDM Group’s Dongyi Hua received a base pay nearly $200,000 less than the company’s previous chief, Andrew Broad.
Producing miners also got among the salary slashing, with iron ore miner Gindalbie Metals’ newly installed chief executive, Dale Harris, receiving a base salary of $600,000, $513,000 less than the man he replaced, Tim Netscher.
Outside the resources sector, property developer and funds manager Aspen Group also appointed a new chief executive at lower than his predecessor’s base salary, with new boss Clem Salwin earning about $146,000 less than interim chief Hugh Martin.
Bucking the trend
For executives in Kerry Stokes-associated companies, however, 2013 wasn’t so bad.
New appointees Don Voelte and Tim Worner received base salary packages that exceeded those of their predecessors, taking the reins at Stokes companies Seven Group Holdings and Seven West Media, respectively.
Mr Voelte’s base pay of $3.2 million was about $200,000 higher than former Seven Group chief Peter Gammel’s base salary, while Mr Worner received around $170,000 more than Mr Voelte did as chief of Seven West.
Also bucking the pay-cutting trend was OTOC’s Adam Lamond, who was awarded a 29 per cent salary increase to $485,000.