10/11/2014 - 12:38

Tough times take a toll on CEO salaries

10/11/2014 - 12:38

Bookmark

Save articles for future reference.

Leaner times in the junior mining and exploration sector have resulted in widespread cuts to chief executive pay, but the restraint has not been shared equally across the sector, with some actually lifting salaries.

Tough times take a toll on CEO salaries

Leaner times in the junior mining and exploration sector have resulted in widespread cuts to chief executive pay, but the restraint has not been shared equally across the sector, with some actually lifting salaries.

More than a dozen Perth-based companies have appointed new chief executives or negotiated new salary packages during the past two months, and a clear pattern is emerging – salaries are heading south.

The latest moves reinforce a pattern that has become increasingly apparent in Business News’s quarterly CEO salary surveys over the past two years.

West Perth-based Orion Gold is an extreme example of cost cutting.

It announced last month that chief executive Errol Smart’s annual salary had been cut in half, from $240,000 down to $120,000.

Chairman Denis Waddell said the new salary package, and Mr Smart’s agreement to support a capital raising, demonstrated his commitment to the company.

He said all members of the management team had agreed to a reduction in their remuneration, to enable the team to stay together at Orion and maximise funds available for exploration.

Buxton Resources and Pluton Resources used the appointment of new chief executives as an opportunity to cut salary costs.

New Buxton chief Eamon Hannon will be paid a base annual salary of $120,000, whereas his predecessor, Anthony Maslin, was paid $180,000.

Pluton, which was placed in receivership this month after battling a series of operational and joint venture problems, slashed its chief executive salary but was still paying a lot more than some of its peers.

Jeremy Bower, who was acting chief executive, was getting paid $360,000, whereas Brett Clark, who was in the job less than a year, was paid $600,000.

Some companies have changed the basis on which they are paying their chief executive, to achieve more flexibility.

Dourado Resources, which has a market cap of just $1.3 million, is employing chief executive Peter Del Fante on a monthly basis.

He is now getting paid total remuneration of $3,500 per month, equating to $42,000 per annum. By comparison, he was paid $105,500 in cash benefits in the year to June 2014.

Counter offer

Merah Resources, which has a market cap of only $2.3 million, has taken a similar tack, but only temporarily.

New managing director Jeremy Read will be paid $10,416 per month up to the end of the calendar year, and will then go on to an annual salary of $250,000.

That is a significant increase from the $200,000 paid to his predecessor, David Deloub.

Vietnam-focused tungsten producer Hazelwood Resources will pay its newly installed executive chairman Mark Warren on a daily basis.

Mr Warren will be paid $1,650 per day (exclusive of GST) and will work for a minimum of three days per week.

Hence, he will earn at least $237,600 a year, and up to $396,000 if he works full time.

By comparison, outgoing managing director Terence Butler-Blaxell was on a base salary of $330,000 but also picked up a cash bonus last year of nearly $187,000.

Also to go against trend is West Perth-based gold explorer Red Mountain Mining, with a market cap of $4.9 million, which has increased its pay rate.

It said last month that chief executive Jon Dugdale’s base salary has increased by $20,000 to $260,000 per annum (plus super).

This followed a reduction of $60,000 in the 2013 financial year.

Mr Dugdale is also eligible to earn a short-term cash bonus of up to 40 per cent of his total fixed remuneration.

Red Mountain withdrew a $2 million rights issue last month after underwriter Patersons Securities exercised its right to pull out of the deal because of the weak share price.

The company instead raised $340,000 from sophisticated investors at 0.6 cents.

Metals of Africa has implemented a bigger salary increase, after Cherie Leeden went from executive director to managing director.

CHERIE LEEDEN: Metals of Africa.


With her new title, Ms Leeden will be paid $US230,000 per annum ($255,500), up from $US180,000.

Announcing the change, chairman Gilbert George said the appointment would not change daily operations within the company, but recognised Ms Leeden’s “significant ongoing efforts” on behalf of the company.

South America-focused gold producer Troy Resources has also lifted its managing director’s salary, after recruiting Martin Purvis in September to succeed Paul Benson.

Mr Purvis will be paid a base salary of $570,000 per year.

By comparison, Mr Benson had been on a base salary of $541,000, before taking a voluntary 25 per cent pay cut for the 2014 financial year.

Like Mr Benson, Mr Purvis can also earn an annual cash bonus of up to 30 per cent of his base pay.

MARTIN PURVIS: Troy Resources.


Complexity

The complex remuneration structures at listed companies means the effect of a reported change is not always immediately obvious.

A case in point is IT firm ASG Group, which recently cut managing director Geoff Lewis’s base salary from $900,509 to $651,500 after a big protest vote at last year’s annual meeting.

However, after adding in a $250,000 cash bonus, $175,000 of non-monetary benefits, including provision of motor vehicles, $87,000 for leave entitlements and superannuation, his cash income was nearly $1.2 million for the year to June 2014 – unchanged from the previous year.

Vanadium project developer TNG has agreed on a new contract with chief executive Paul Burton, who maintained his $360,000 annual salary (plus super) and looks set to benefit from a new incentive scheme.

Mr Burton will receive an incentive equal to 15 per cent of base salary, if TNG’s market cap reaches trigger points set by the board, starting at $50 million.

At the time of the announcement, in mid October, TNG said Mr Burton had already qualified for a bonus payment.

Unusually, the agreement also provides for Mr Burton’s base salary to increase if the company’s market cap stays above certain trigger points for at least three months.

Another company maintaining its salary level is Chalice Gold Mines, albeit with a slimmed down board of directors.

Last month, Chalice announced that executive chairman Tim Goyder would succeed outgoing managing director Bill Bent.

Mr Goyder earned $300,000 last year as executive chairman, and his pay will rise to $390,000 (inclusive of superannuation) in the new role. That is in line with Mr Bent’s package.


STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options