boardroom-pay-asx

Spotlight on Boardroom Pay:
the ASX

Issue 112, January 2015

A ranking of junior mining companies on the ASX by boardroom pay shows that salaries remain in rude health, even as investors suffer 4 years of consecutive losses.

New Zealand-based coal miner Bathurst is the best paying junior on the ASX, based on over 100 companies valued between A$100m and A$25m, with managing director Hamish Bohannan drawing more than double the average of peers. Bathurst has also lent $390,000 to Mr. Bohannan, who owns less than 1 per cent of the company’s stock. Shares have dropped 86 per cent in the last year.

Companies in Papua New Guinea appear prone to paying generous salaries, with copper junior Highlands Pacific paying chief executive John Gooding more than double the peer group average. Gooding has collected cash bonuses of over $600,000 in the last 2 years, on top of his base salary, despite shares plunging nearly 90 per cent since 2011.

Hefty boardroom salaries appear to sit comfortably alongside dire company performance, though the figures are in large part a trailing indicator of some of the worst performing stocks on the ASX, as director payouts fail to fall in line with collapsing corporate values.

Of the 10 top ranking companies by pay, only Kenya-focused Base Resources has delivered a positive return over either 1, 3 or 5 years, whilst 2 of the 10 best paid boards, those of Mirabela Nickel and Atlantic Ltd., have failed and are being restructured, wiping out investors.

The data also shows that investors are alive to excessive remuneration. Most companies are tightly bunched around the peer group average of $1.6m per board each year, whilst iron ore hopeful Sundance, which appointed contracting boss Wal King as its chairman in September, recently cut both salaries and the size of its board following a hostile shareholder vote.

Many juniors are “a bunch of liabilities”, investor Rick Rule has said. “Their assets are liabilities, their financials are liabilities, mostly their managements are liabilities.” Bathurst declined to comment.

Click to Open Rankings 

“Their assets are liabilities, their financials are liabilities.”

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