The company's remuneration committee said in its annual report for the year to September 2017 that it had decided to award salary increases of 2.9percent and 5percent, respectively, for Magara and chief financial officer Barrie van der Merwe for the 2018 financial year.
Lonmin, which is the subject of a takeover bid by Sibanye-Stillwater, said that Magara’s salary and fees had increased to £475552 (R7995870) on October 1, 2017, from £462150 on October 1, 2016, while Van der Merwe’s salary had increased to R4233600 on October 1, 2017, compared with R4032000 on October 1, 2016.
Lonmin, which employs about 35000 people, said the benefits and retirement benefits for the coming year would remain substantially unchanged from prior years.
Magara’s taxable benefits in 2017 included £92430 in pension-related benefits, £84868 in taxable benefits and £466933 in short-term benefits.
Van der Merwe’s taxable benefits for 2017 included £24661, £43876 in pension-related benefits, and a short-term incentive of £238153.
“Shareholders will note that Ben opted to waive his salary increase in respect of 2017, and therefore this represents the first increase to his salary since October 2013, Varda Shine, the chairperson of the remuneration committee, said.
The increases were against the backdrop of South Africa’s Consumer Price Index (CPI), which was close to 6percent at the end of the 2017 financial year. Lonmin said this was reflected in pay trends in this market where average salaries increased at senior levels by between 5percent and 6percent. CPI in the UK at the same time was 3percent.
In terms of incentive outcomes, the remuneration committee had approved a bonus equivalent to 40percent for Magara and Van der Merwe.
“These outcomes are approximately one third lower than the bonuses for the previous year and are below the on-target opportunity.”
The committee is of the view that these outcomes fairly reflect the progress made in challenging circumstances. The Long-Term Incentive Plan (LTIP) awards granted to Magara in 2014 lapsed in full.”
Lonmin said it had obtained shareholder approval for the previous remuneration policy at the 2015 annual general meeting.
“Under the three-year renewal cycle set out in the UK regulations, Lonmin will be seeking shareholder approval to renew the remuneration policy at the 2018 AGM,” which will be held in London on March 15.
There were no major changes proposed in respect of short-term incentives for the coming year.
The committee recognised that it was important that any new LTIP awards were aligned with its strategic priorities, and considered in the context of the offer from Sibanye-Stillwater, with the ultimate objective of preserving shareholder value.
“With this in mind, the committee has decided to delay consideration of any awards for 2018 until later in the financial year. We intend to engage with our major shareholders regarding the key terms ahead of the grant of any awards.”
The company has faced liquidity challenges, owing to the low platinum pricing environment, which was creating damage to an already ailing industry that had already sacrificed at least 26000 jobs in the past five years and continues to under-invest in its future.
Lonmin shares closed 4.78percent lower at R12.76 on the JSE yesterday.
- BUSINESS REPORT