Anglo Shareholders Revolt on Executive Pay After Worst Year

  • Pay award passed even as 42% voted against it at miner's AGM
  • ISS and ShareSoc had urged investors to reject pay at meeting

Anglo American Plc shareholders revolted against an executive pay plan after corporate-governance advisers backed rejecting the award following the mining company’s biggest share slump on record.

At the company’s annual general meeting in London on Thursday, 42 percent of the votes were against the pay award, Anglo said in a statement on Friday. While the plan was still passed, Legal & General Group Plc, one of the biggest shareholders, voted against it.

Institutional Shareholder Services Inc. last week recommended that shareholders reject the company’s remuneration report, while ShareSoc said Chief Executive Officer Mark Cutifani’s proposed pay was too high and should be denied. Another adviser, Glass Lewis, recommended that shareholders should vote for the remuneration report.

“Post a challenging 2015 as earnings have been hit, dividends cut, and poor equity performance, growing shareholder opposition to remuneration packages in the sector are a sign of the times,” Investec Plc said in a note to investors Friday.

Turnaround Plan

Anglo was the worst performer in the FTSE 100 Index last year, losing 75 percent of its value. The century-old producer is now trying to engineer a turnaround by selling more than half its mines and exiting the iron-ore and coal business to focus on its best assets -- diamonds, platinum and copper. The London-based firm has rebounded this year, more than doubling in value.

ISS said last week that the company’s remuneration committee had maintained its long-term stock awards as a proportion of salary, despite a steep drop in the share price last year. That meant a share price rebound would lead to considerable gains in pay.

Legal & General Group, which holds 2.9 percent of Anglo’s stock, said Thursday that it voted against the pay award, echoing ISS’s concerns.

“These grants are made as a multiple of salary and have the effect of awarding a higher number of shares, which could lead to windfall gains in the future,” Legal & General said. “This is not in line with best practice and is stated in our voting policy.”

Cutifani’s total compensation fell 8.3 percent last year to 3.4 million pounds ($4.9 million). The company said his bonus was reduced by 40 percent and his variable pay was a fifth of the maximum he could have earned. Anglo said it will consult more with shareholders in the coming 12 months before a vote in 2017 on remuneration policy for the next three years.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE