15th Apr 2016 11:20
LONDON (Alliance News) - An influential voting advisory firm has urged shareholders of Anglo American PLC to reject the proposed remuneration package being offered to the company's chief executive, Sky News reported on Friday.
Without citing a source, Sky said it has learnt that the advisory firm Institutional Shareholder Solutions has told Anglo American shareholders to reject the pay packet being offered to the company's Chief Executive, Mark Cufitani, following the huge loss the company booked in 2015.
ISS's recommendation - which contrasts with that of Glass Lewis, another proxy adviser - is likely to sway the voting decisions of a number of shareholders, and sources close to Anglo said initial indications were that roughly 20% of investors may oppose the pay report, Sky reported.
The news comes less than 24 hours after BP shareholders stunned the city, with over 59% voting against its pay packers for CEO Bob Dudley and Chief Financial Officer Brian Gilvary - a virtually unprecedented rebellion for a company of its size.
http://news.sky.com/story/1679267/anglo-pay-row-looms-as-iss-urges-oppose-vote
The potential protest against Anglo American's pay packets could signal the start of an increased level of pressure and more intense scrutiny of the salaries and bonuses being offered to large London-listed firms, with the natural resource sector particularly vulnerable to criticism due to the severe drop in prices which has led most major oil or mining companies to plunge into the red.
Although shareholders at BP rejected the pay packet offered to CEO Dudley on Thursday, the vote was only advisory and the company still paid the cash out, but alleviated some concern by promising to revise its policy for next year's AGM.
However, a fundamental difference between the revolt against BP's pay for its CEO and the possible revolt against Anglo American's proposed package is that BP increased Dudley's pay whilst Anglo American is proposing to reduce Cufitani's package.
Anglo American has proposed paying Cufitani a total remuneration package of USD3.4 million for 2015, a year when the multi-commodity miner reported a USD5.45 billion pretax loss, over 21-times larger than a relatively small loss in the previous year as the ongoing commodity rout took its toll.
Still, the USD3.4 million is the lowest package to be paid to Cufitani in the three years he has been at the helm of the company. The pay packet in 2014 was 8.8% higher at over USD3.7 million and the pay packet in his first year in charge during 2013 amounted to USD5.3 million - 56% higher than the packet currently on offer.
Cufitani's predecessor, Cynthia Caroll, saw her pay substantially decline in the last two years at the company before leaving in 2013. Carroll was paid USD4.4 million in 2009 before that soared to USD8.1 million in 2011, but it then declined to USD3.2 million in 2012 and then to USD1.5 million in her last year in 2013.
That means the pay packet paid to Cufitani in his first year in charge was 3.5 times higher than what Carroll was paid in the previous year before she left the business.
To put it into further context, BP's Dudley has seen his salary increase by 1.6% in 2015, his annual cash bonus increase by 29% and his benefits rise by 4.4% to total USD3.36 million - 14% higher than what he was paid in 2014.
However, once Dudley's share incentives are taken into account, his total package is down 2.1% from the previous year. But Dudley's pension and retirement savings have also increased substantially, meaning his total package plus pensions and savings was up almost 20% from 2014.
Although Cufitani's pay packet is falling, his multi-million wage comes at a time when Anglo American is downsizing its business which will lead to its workforce being reduced by around two-thirds - representing around 85,000 job losses that started in 2015 and will continue over the next couple of years.
Anglo American shares were down 3.5% to 665.90 pence per share on Friday.
By Joshua Warner; [email protected]; @JoshAlliance
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