Never a bad day at the office for Anglo American execs

Anglo American's annual report released this week takes great pains to set out the mining giant's policies around director's responsibilities and incentives.

After an outcry over a generous long-term incentive plan for execs in the form of stock options granted in 2016 at the nadir of the commodity cycle, Anglo overhauled its policies.

Governance issues cover 54 pages in the annual report, and the level of detail is impressive (down to club membership, car allowances and tax advice) but one table really jumps out.

Executive director remuneration including basic salary, benefits in kind, bonuses, pensions, and those LTIPs that vested last year show the top brass at the London-HQ company doubled their income last year.

The committee acted robustly to ensure that executive remuneration for 2018 was appropriate

CEO Mark Cutifani took home US$18.9m (GBP14.67m), up from $9.2m in 2017 with more than two-thirds of the total as a result of vesting stock grants. That translates to $72,000 per working day, assuming Cutifani never took a day off from his duties.

Technical chief Tony O'Neill pocketed $10.6m (including a tax advice benefit valued at all of $1,200) while CFO Stephen Pearce had to be content with $9.6m (including $38,300 in car-related benefits which does not go a long way if you're in the Bentley-bracket).

Anne Stevens, chair of Anglo's remuneration committee, explained why rewarding execs at a mining company is such a fraught undertaking:

I am acutely aware that executive pay remains a contentious topic. It is never easy to strike an equitable balance between incentivising and rewarding management and reflecting the interests of shareholders and wider stakeholders.

Volatility in remuneration outcomes, and especially regarding long-term incentive plans (LTIPs), continues to be a factor of the mining sector and of product prices.

Through the application of a cap on LTIP vesting, the committee acted robustly to
ensure that executive remuneration for 2018 was appropriate and that the impact on remuneration of the share price rise over the past three years was reduced significantly.

Without the cap Cutifani would've been eligible for an additional $8.3m under the LTIP for his efforts to turn the company around since taking over the helm in 2013.

As the annual report is also happy to point out, three-year shareholder returns at Anglo is a heartwarming 285%.

Which probably means that shareholders of the $33 billion company will let this expensive year for director pay through without too much of a grumble.

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