PIRC: Recommends Lonmin Holders Oppose Remuneration Report
01/22/2013| 11:17am US/Eastern
By Alex MacDonald
LONDON--Shareholders of South African platinum producer Lonmin PLC (>> Lonmin Plc) should vote against the company's remuneration report on the grounds that certain awards, particularly to the acting chief executive officer, could be deemed excessive and insensitive given the company's recent labor strike, U.K. independent shareholder advisory body PIRC said Tuesday.
Lonmin, the world's third largest platinum producer, suffered a strike last summer at its largest South African platinum mine, Marikana, which resulted in 34 deaths as workers protested for higher wages. The protests resulted in lost platinum production that ultimately led the company to issue shares in order to avoid breaching its debt covenants. During the protests, Lonmin also appointed Chief Financial Officer Simon Scott as acting CEO after its former CEO Ian Farmer fell seriously ill and was hospitalized.
PIRC said Mr. Scott, serving as interim CEO, was awarded a retention payment of GBP814,625 ($1.29 million) in addition to extra salary for being interim CEO while striking miners who were seeking to raise their salaries of $300-500 per month were paid a signing bonus and an 11% to 22% annual salary increase by comparison, PIRC said.
"The remuneration committee demonstrated a lack of sensitivity to internal factors with their decision to make a significant retention award payment to the CFO following the strike," PIRC said in a statement. "It is not clear that the strike was resolved in a way which merited any kind of award," it said, adding that decisions made by the company on how to handle the strike, including declaring the strike illegal and threatening to fire workers who did not return to work, are still under investigation.
The award has a face value of GBP814,625, or 2.5 times Mr. Scott's base salary and is discretionary, PIRC said.
Lonmin shareholders are due to vote on the remuneration report at the company's annual general meeting on Jan 31.
Write to Alex MacDonald at firstname.lastname@example.org
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