Belfast Telegraph

Anglo American to cap executive directors' bonuses ahead of AGM

Anglo American has moved to cap the bonuses of its executive directors in attempt to stamp out a potential shareholder rebellion at this year's annual general meeting (AGM).

Mark Cutifani's maximum annual bonuses will be cut to 300% from 350% of his basic salary to bring it "into line with other executive directors".

The mining giant will also introduce a cap on executive awards through the long-term incentive plan (LTIP), with Mr Cutifani's being limited at £13.1 million.

The move, which will cap the LTIP at twice the face value of the award at the time of vesting, follows a shareholder outcry when the firm's low share price boosted the CEO's pay for 2015.

The changes were revealed as the firm published its annual report showing a 15% rise in Mr Cutifani's pay package to just short of £4 million for last year.

It included salary, bonuses and pension payouts, but he did not receive an LTIP award after failing to meet company targets.

Writing in the annual report, chairman Sir John Parker said: "As you know, at the AGM held in April 2016, we received a substantially lower percentage of support from shareholders than that achieved in previous years.

"Although there is no perfect remuneration system, the board believes that at Anglo American there is a relatively good correlation between profitability and levels of variable remuneration, and that our remuneration system is fair, performance-based and peer-comparable."

The company said it had decided to increase executive salaries by 2% in 2017, "in the light of the directors' contribution to the company's improved financial position over 2016".

The adjustments to the remuneration policy will face an investor vote at the AGM on April 24.

The firm faced an investor backlash last year when 42% of shareholders voted against the boss's bumper pay deal in a non-binding ballot.

Luke Hildyard, policy lead at the Pensions and Lifetime Savings Association (PLSA), said the changes may not be enough to satisfy investors.

"Research increasingly questions whether very generous pay packages, far beyond pay levels of ordinary workers, are necessary to attract, retain and incentivise business leaders.

"When we surveyed our members on this issue last year, pension fund investors took the view that executive pay is too high and that pay gaps are damaging to business.

"While Anglo American's direction of travel is to be welcomed, it remains to be seen whether shareholders will be happy to approve executive pay awards that remain very high by most people's standards."

Anglo's remuneration proposals come amid a flurry of pay announcements, which revealed that Sir Martin Sorrell was on course to pocket £50 million when WPP publishes its annual report.

Royal Dutch Shell and Rolls-Royce also outlined on Thursday that they had given hefty pay rises to top bosses despite lacklustre results.

Shell chief executive Ben van Beurden was handed a 54% hike in his pay package last year to 8.59 million euro (£7.5 million), as he was awarded a potential 4.4 million euro (£3.8 million) under a long-term shares bonus scheme.

Rolls-Royce boss Warren East landed a £916,000 bonus and will receive an £18,000 pay rise this year despite the aircraft engine maker posting its largest ever loss and one of the biggest in UK corporate history.