Kumba Iron Ore, a subsidiary of Anglo American, has been through serious storms over the past few years which have compromised its profitability but its executives have done pretty well for themselves. Take the former CEO, Norman Mbazima, who left towards the end of 2016. He left with a package of R11.3 million which may sound reasonable by CEO departure package standards. But look back and you’ll see the windfall. He got R21 million in 2015 and R19.7 million in 2014. Prospects for Mbazima’s successor, Themba Mkhwanazi who came from Anglo Coal are looking good judging by what he in the few months at Kumba.
There will be an argument that executives who steer companies through tumultuous phases deserve to be paid well. Yes they have a difficult and stressful job. But surely there is also sense in the argument which says that the negative consequences of harsh market conditions must be fairly shared and not be exclusively carried by workers.
Like many other miners, the company has come under immense pressure in recent times due to the depression of commodity prices plus tense labour relations. Kumba is positioned as one of the largest miners of iron ore in the world with annual revenue coming in at R40 billion rands in 2016. While revenue was up from R36 billion in 2015 its gone down significantly since 2013 when it was R54 billion. So have operating profits which moved from R28.3 billion in 2013 to R19 billion in 2014, R2 billion in 2015 and R15.3 billion in 2016.
The remuneration of Kumba’s non executive directors is relatively reasonable as reflected in the fees earned by the chairperson of the board. Fani Titi earned R1.2 million setting a relatively reasonable pace for everyone else on the board as reflected in the table below. The board went through some considerable changes in 2016 with:
- Mbazima and his CFO Frikkie Kotzee gone,
- Natascha Viljoen came in to replace Tony O’Neil as Anglo American representative,
- Nonkululeko Dlamini joined as shareholder representative of the Industrial Development Corporation
- Seamus French joined as an alternate non-executive
- Litha Nyhonyha resigned as an independent non-executive director
|Kumba Iron Ore December 2016 Exec Remuneration (Rand in Million)|
|Total Exec Dir||14,4||11,3||0,5||26,2||29,4||-32,3|
|Kumba Iron Ore 2016 Non Exec Remuneration (Rand in Million)|