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FTSE 100 firm cracks down on bonuses after shareholder revolt Anglo American caps bonus payouts after shareholder revolt
(about 2 hours later)
Mining company Anglo American is attempting to head off a fresh row over executive pay by capping the size of bonus payouts in the face of sharp movements in its share price.Mining company Anglo American is attempting to head off a fresh row over executive pay by capping the size of bonus payouts in the face of sharp movements in its share price.
More than 40% of its shareholders voted against its pay deals last year and the company is issuing its pay schemes this year at a time of renewed scrutiny over directors’ bonuses following Theresa May’s pledge to clamp down on corporate excess.More than 40% of its shareholders voted against its pay deals last year and the company is issuing its pay schemes this year at a time of renewed scrutiny over directors’ bonuses following Theresa May’s pledge to clamp down on corporate excess.
The mining company’s share price has formed a V-shape in the past two years, falling from £11.60 in early 2015 to below 225p in January 2016 before rallying to more than £11 again.The mining company’s share price has formed a V-shape in the past two years, falling from £11.60 in early 2015 to below 225p in January 2016 before rallying to more than £11 again.
These movements have an impact on executive pay as bonuses are linked to awards of shares relative to salary: when the share price is low the executive receives a higher number of shares and when the share price rallies the shares that are released from long-term schemes are worth more.These movements have an impact on executive pay as bonuses are linked to awards of shares relative to salary: when the share price is low the executive receives a higher number of shares and when the share price rallies the shares that are released from long-term schemes are worth more.
For instance Mark Cutifani, the chief executive, is entitled to shares worth 350% of his £1.3m salary that pay out after a three-year performance period. In 2015 he received 360,000 shares. Last year he received 993,000 shares – then valued at £4.4m but now worth nearly £12m.For instance Mark Cutifani, the chief executive, is entitled to shares worth 350% of his £1.3m salary that pay out after a three-year performance period. In 2015 he received 360,000 shares. Last year he received 993,000 shares – then valued at £4.4m but now worth nearly £12m.
Sir Philip Hampton, the non-executive director who chairs the remuneration committee, said: “We were determined to address investors’ concerns about the potential windfall gains for executive directors arising as a result of the volatility of the company’s share price and the mining industry more generally.”Sir Philip Hampton, the non-executive director who chairs the remuneration committee, said: “We were determined to address investors’ concerns about the potential windfall gains for executive directors arising as a result of the volatility of the company’s share price and the mining industry more generally.”
Cutifani will now be able to receive shares worth 300% of his £1.3m salary compared with 350% and will have his gains from bonuses issued between 2014 and 2016 limited at £13.1m. From this year onwards, gains will be limited to twice the face value of the shares when they were granted.Cutifani will now be able to receive shares worth 300% of his £1.3m salary compared with 350% and will have his gains from bonuses issued between 2014 and 2016 limited at £13.1m. From this year onwards, gains will be limited to twice the face value of the shares when they were granted.
His pay in 2016 was £4m, up from £3.4m, fuelled by a £2.3m bonus.His pay in 2016 was £4m, up from £3.4m, fuelled by a £2.3m bonus.
The Pensions and Lifetime Savings Association said the proposed change did not go far enough. “While Anglo American’s direction of travel is to be welcomed, an annual bonus potentially worth 300% of a salary, on top of fixed pay approaching £2m, still seems far too generous,” Luke Hildyard, a policy lead at the PLSA, told Reuters.The Pensions and Lifetime Savings Association said the proposed change did not go far enough. “While Anglo American’s direction of travel is to be welcomed, an annual bonus potentially worth 300% of a salary, on top of fixed pay approaching £2m, still seems far too generous,” Luke Hildyard, a policy lead at the PLSA, told Reuters.
Another executive who received a rise in pay last year was Nicandro Durante, chief executive of British American Tobacco, who got £7.6m in 2016 compared with £4.5m a year earlier. Durante’s pay was boosted by a £2.9m payout from his long-term bonus plan, which had paid out £414,000 in 2015.Another executive who received a rise in pay last year was Nicandro Durante, chief executive of British American Tobacco, who got £7.6m in 2016 compared with £4.5m a year earlier. Durante’s pay was boosted by a £2.9m payout from his long-term bonus plan, which had paid out £414,000 in 2015.
Durante’s salary is rising by 5% to £1.25m from April to recognise his “outstanding performance in 2016, in particular his individual leadership of the business in the year and his pivotal role in driving the group’s growth agenda”. UK employees are receiving rises between zero and 8%.Durante’s salary is rising by 5% to £1.25m from April to recognise his “outstanding performance in 2016, in particular his individual leadership of the business in the year and his pivotal role in driving the group’s growth agenda”. UK employees are receiving rises between zero and 8%.
Earlier this year BAT announced plans to buy the 58% it did not already own of Reynolds American.Earlier this year BAT announced plans to buy the 58% it did not already own of Reynolds American.
Its rival Imperial Brands was forced to abandon plans for a pay rise for its chief executive Alison Cooper from a potential £5.5m to a potential £8.5m to head off a shareholder revolt at its annual meeting earlier this year.Its rival Imperial Brands was forced to abandon plans for a pay rise for its chief executive Alison Cooper from a potential £5.5m to a potential £8.5m to head off a shareholder revolt at its annual meeting earlier this year.