ShareSoc Advises Investors to Vote Against Anglo American Remuneration Report

PRESS RELEASE 74 14/4/2016

ShareSoc (the UK Individual Shareholders Society) is advising its Members to vote against the Remuneration Report resolution at the forthcoming Annual General Meeting of Anglo American. We consider the pay of the CEO to be too high, and particularly so in a year when the company suffered a loss of $5.6 billion in 2015 and dividends were suspended. The market cap of Anglo has shrunk from £50 billion in 2008 to £8 billion today. However, CEO remuneration has not been reduced to reflect the smaller simpler company that Anglo now is. The CEO is still anticipated to receive £6.3 million for target performance and £8.8 million for “above” target performance. 

Background

Following the “steep fall in commodity prices” of 24%, Anglo has adopted a streamlined structure, reduced its number of assets (mines) from 65 in 2013 to 45 today and a 50% reduction in head office costs. However, Mark Cutifani’s salary remains at £1.261 million per year.

ShareSoc also question:

 Why has the CEO bonus pay out been so much (average 68% of maximum) when share price performance has been so poor? 

 Why has the LTIP payout been so high (average 56% of maximum) when the share price performance has been so poor?

2009

2010

2011

2012

2013

2014

2015

Average

Bonus as % Maximum

99%

88%

94%

35%

65%

60%

36.5%

68%

LTIP Vesting as % Maximum

61%

50%

96%

50%

28%

N/A

50%

56%

Cliff Weight, ShareSoc spokesman on remuneration issues said “the remuneration committee appear to have been consistently over-rewarding the CEO.”

The maximum bonus is 210% of salary. In 2015, the EPS part of bonus paid zero bonus out of maximum 50%, but the other elements were assessed by the remuneration committee as worthy of 36.5% out of maximum 50%. However there is no detailed disclosure of the criteria for threshold target and maximum performance for “Strategic development”, ”Talent management”, “Business improvement”, “Endowment” and “Stewardship”. For 2015, Mark Cutifani received a bonus of £996,000 (77% of salary).

Cliff Weight also commented “Shareholders cannot see the linkage between their returns and bonus paid to the CEO.”

The long-term incentive plan has three performance measures, and an annual award of a maximum of 3.5 times salary of shares. Although the share price has dropped 80%, there was no reduction in the size of LTIP awards. 

The LTIP ROCE measure is set against internal Anglo targets. Cliff Weight noted “This makes it very difficult for shareholders to judge how easy or difficult the targets are.” 

For further information, please contact:

Roger Lawson
Deputy Chairman, ShareSoc
Telephone: 020-8295-0378