South Africa’s Biggest Fund Rejects Mining Executives’ Pay

Public Investment Corp., the biggest South African investor, voted against the executive pay of the nation’s largest gold and platinum mining companies because it failed to track performance and was high relative to peers.

State-run PIC, managing public workers’ pensions, rejected pay plans at Anglo American Platinum Ltd., Gold Fields Ltd., AngloGold Ashanti Ltd., Sibanye Gold Ltd. and Royal Bafokeng Platinum Ltd., it said today in a statement. PIC voted at the companies’ annual general meetings in April and May this year.

South African mining companies have been resisting demands from labor unions for above-inflation wage gains for underground workers, saying they are unaffordable. PIC said Gold Fields’ proposal to hold the pay of Mamphela Ramphele, chairman at the time, at 2.4 million rand ($235,000) meant it was “too high” at almost double the median figure of resource peers.

“The remuneration policy appears to be inconsistent with best practice,” said PIC, the biggest owner with 7.3 percent. “There are no clear defined group performance targets.”

Gold Fields, which spun off most of its domestic assets to create Sibanye this year, in 2012 paid Chief Executive Officer Nick Holland 45.3 million rand, up 38 percent, including 24.3 million rand of share payouts originally awarded in 2009.

Gold Fields spokesman Sven Lunsche declined to comment.

Unions are demanding pay for entry-level underground gold workers of as much as 12,500 rand a month, from 5,000 rand now.

External Agency

The Chamber of Mines, representing gold companies, has offered an inflation-matching increase of 5.5 percent to 5,275 rand a month excluding allowances and bonuses.

PIC said Anglo American Platinum, the biggest producer of the metal, had “no clearly defined performance targets and sustainability measures.” It’s the biggest shareholder after Anglo American Plc, according to data compiled by Bloomberg.

Anglo American Platinum didn’t immediately respond to requests for comment by phone and e-mail.

AngloGold’s remuneration is “the result of a comprehensive benchmarking exercise against a group of local and global peers,” with targets related to safety, shareholder return and implementation of strategy, it said in an e-mailed statement. The company will maintain a dialogue with shareholders, it said.

Royal Bafokeng Platinum is considering changes to its payment policy which currently is based on the previous year’s operational performance, according to the Johannesburg-based group’s executive for human resources, Vicky Tlhabanelo.

Different System

A different system may be implemented in 2014 and will “factor in market conditions and shareholder expectations in terms of returns,” Tlhabanelo said in an e-mailed reply to questions.

Gold Fields’ Ramphele, who quit in February, was paid 2.3 million rand in 2012, according to the company’s annual report.

“We’re a new company having been spun out of Gold Fields so our remuneration of non-executive directors is similar to that of Gold Fields,” James Wellsted, a spokesman for Sibanye, said today by phone. The company has “employed an external agency to help” realign pay, Wellsted said.

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