DRC: New Glencore CEO Nagle’s proposed salary is drawing criticism
Glencore’s current CEO Ivan Glasenberg will soon be stepping down, to be replaced by Gary Nagle at the end of June.
Glencore, the Swiss mining and trading giant that is
particularly active in the DRC’s copper and cobalt sectors, has offered Nagle a
salary of up to $10.4m a year.
This amount, which consists of a base salary of $1.8m, a
short-term incentive of 250% and a long-term incentive of 225%, has prompted
the influential proxy advisory firm Glass Lewis to recommend that shareholders
oppose such a high remuneration policy at the company’s next general meeting on
29 April.
The US firm considers the remuneration to be “excessive for
a newly appointed CEO who has no prior experience of running a listed company.”
Glasenberg’s shoes
This opinion is shared by both Institutional Shareholder
Services, another proxy advisory firm, and the Investment Association, a trade body
whose members oversee £8.5bn ($11.8bn) worth of assets. The latter has issued a
red warning – the highest level of warning it issues – on Glencore’s
remuneration policy, reports the Financial Times.
Nagle’s proposed salary is far higher than Glasenberg’s.
Glasenberg, who has been Glencore’s CEO since 2002, has refused any salary
increase as well as any bonus and incentive beyond his annual salary of $1.5m.
He has been able to bear this “sacrifice”, as he owns a large number of the
company’s shares.
Glasenberg, who owns 9.1% of Glencore, was – and remains –
the second-largest shareholder of the group, of which he intends to remain a
director, just behind its number-one investor, Qatar Holding LLC (9.17%), but
well ahead of its third, Harris Associates LP (4.98%).
Another area of contention for Glencore’s shareholders
Glencore, which points out that 40% of the future CEO’s bonuses
will be withheld during his first two years, has written in its latest annual
report that the Nagle’s terms are “reasonable and align with the shareholders’
interests.” It also points out that many of its rivals’ CEOs receive salaries
that are often as high as $11 to $18m.
For instance, AngloGold’s CEO Mark Cutifani is paid more
than $10m a year. However, other major bosses in the sector saw their salaries
fall in 2020 due to the impact of the Covid-19 pandemic on their company’s
results. For example, BP’s Bernard Looney received $2.4m (compared to a maximum
of $15.2m under the company’s pay plan), while Royal Dutch Shell’s CEO Ben van
Beurden’s earnings fell by 42% to $7m in 2020, according to Reuters.
After disappointing results in 2019 (a $404m loss, compared
to $3.4bn in profits in 2018), Glencore also suffered a severe setback in 2020,
with a $1.9bn loss, but stabilised its earnings before interest, tax,
depreciation and amortisation at $11.56bn (compared to $11.6bn in 2019 and
$15.6bn in 2018).
If they follow the recommendations of the various proxy
advisors on 29 April, Glencore shareholders will make the CEO’s salary their
third area of contention, alongside ensuring transparency and environmental
issues. They are also due to vote on the company’s plan to become carbon
neutral by 2050 – a point on which Glass Lewis recommends that they abstain, as
the climate issue is the responsibility of the board of directors, which is in
charge of overseeing the company’s strategy.
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