Aquarius Platinum leaders sort to send an SOS to stakeholders through a raft of cash cost cutting proposals that impact on their remuneration. The message seems to be: Desperate times calls for desperate measures.
The Aquarius Platinum board members have proposed to take a 10% cut on directors fees and further offered to receive 25% of their fees in shares in lieu of cash.
This forms part of a raft of cash cost cutting proposals that impact on the remuneration of directors of the third largest platinum miner in the world, Aquarius.
The proposals also include an unsolicited offer from Aquarius CEO Jean Nel to receive approximately 70% of his salary and any applicable bonuses he may receive over the next three years (commencing from 1 July 2013) in shares instead of cash.
The proposal will come to meet the well established lamentations that the bosses of South African corporations earn far too much as measured against the workers. This argument becomes the driver when workers negotiate for annual wage increases. It becomes difficult to tell workers to restrain their demands when bosses aren’t doing the same.
Aquarius said its board and executive management have agreed to amend their remunerations in initiatives designed to reduce operating costs and conserve cash resources during the present difficult operating environment.
“To assist in the preservation of the Company’s cash resources the non-executive directors have agreed to a reduction in directors’ fees of 10% and offered to receive 25% of their remaining director fees in shares in lieu of cash subject to
regulatory and shareholder approval at the Company’s AGM to be held in late November 2013”.
The number of shares would be calculated by dividing 25% of the residual fee by the simple average of the share price over the preceding calendar quarter. The first affected payment would be due on 31 March 2014.
In Nel’s case the number of shares to be issued will be fixed at 708,000 per annum and set at US$0.62 per share, being the VWAP of the share price on the LSE for the month of June 2013. Any shares issued as part of a bonus will be issued on the same terms”.
Nel has, for the second consecutive year, asked not to be considered for a salary increase in 2014”.
Aquarius said the Remuneration Committee and Board of Aquarius, after having taken appropriate legal and governance advice unanimously approved the proposal, subject to shareholder approval.
The company added that a Directors/Employees Share Plan (Plan) will be placed before shareholders for approval at the November 2013 AGM to allow participants to acquire shares in the Company by way of a salary sacrifice at terms and conditions as agreed.
“This Plan will act as a quasi long term incentive plan and reduce the cash component of remuneration of participating
individuals. Participants will be entitled to sell some of the shares issued to them to the extent that it is required to cover any taxes due by the Participant”.
“The Board of the Company believes that the implementation of the Directors/Employees Share Plan, the proposed
reduction in the cash component of Mr Nels salary and the proposed amendments to non-executive directors’ fees demonstrate an acknowledgement of the difficult operating conditions and need for restraint…”
The board added that the initiatives will deliver further alignment of the company and its key executives, a reduction in cash outflows at a time when corporate costs are being restructured, and the long term objectives of the Company and its shareholders.
“With the initiatives detailed above as well as other corporate cost saving initiatives, Aquarius’ cash corporate costs in the Group has been reduced by in excess of 50% to below $6 million per annum”.