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Executive pay link to fatalities

Companies
Johanesburg - Kumba Iron Ore, South Africa’s biggest iron ore producer and a supplier to the global steel industry, plans to review its executive remuneration policy in a bid to reach a zero fatality rate. This follows the death of two employees in separate accidents last year.

Kumba’s remuneration committee chairperson Allen Morgan told the company’s general meeting on Thursday the company was committed to revise the policy with shareholders and experts.

“Shareholders feel that the penalty for management’s poor safety performance is not severe enough, and we will look at that. We will start a consultation process after July,” Morgan said.

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He added that Kumba was a caring company and, in an event of a fatality, employees received a policy payout amounting to three times their annual salary, while a life insurance policy was paid out to their children in addition to the pension payout.

Read also: Kumba up, sees higher annual profit 

A company spokesperson said the key performance area weighting for Safety, Health & Environment for the chief financial officer was 5 percent.

The spokesperson said this was linked to the chief financial officer’s visible felt leadership to instil safe behaviour in their main area of responsibility and was not specifically linked to fatalities.

The weighting for the chief executive was set at 12 percent, because they were responsible for leading the safety performance of the entire organisation, including the elimination of fatalities.

Shareholder activist Theo Botha told the meeting the company’s executives had “shot the lights out” in bonuses while there were fatalities not only in Kumba, but at parent company Anglo and its platinum subsidiary Anglo American Platinum.

“We want to have a situation where the remuneration and performance bonuses are clawed back until the company reaches zero fatalities,” he said.

Kumba said in its 2016 annual report that two employees had died, although it was fatality free in 2015.

The company said Grahame Skansi had died in a machine accident at the company’s Kolomela Mine and Gideon Dihaisi was electrocuted while working at the Sishen Mine in the Northern Cape.

Newly appointed chief executive Themba Mkhwanazi responded that safety was not something the company took lightly.

BUSINESS REPORT ONLINE

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