Newcrest slashes executive pay, bonuses
Mr Robinson's total remuneration slipped from $3.69 million in fiscal 2012, to $2.73 million in fiscal 2013. A significant factor in the slide was the absence of short-term incentives, with Mr Robinson denied any short-term bonuses after a terrible year for the company.
Newcrest reported a net loss of $US5.77 billion for the 2013 financial year, after more than $US6 billion of asset write-downs and restructuring costs.
Newcrest's share price slumped from $23.50 to about $10 during fiscal 2013, as missed targets and a major slump in the gold price took a toll. The share price was also harmed by a market disclosure crisis in June, which is still being investigated by the Australian Securities and Investments Commission.
Those problems ensured a lower remuneration package for Mr Robinson, and convinced the board it could not offer him a pay rise when the company conducts its remuneration review in October.
"Reflective of Newcrest's financial performance in the 2013 financial year, remuneration outcomes were considerably lower than in previous years," the company said on Monday.
Finance director Gerard Bond and other executives will get less than 8 per cent of their short-term incentives. Newcrest policy stipulates long-term incentives are calculated over a three-year period and vest in November each year.
The company reassured investors the vesting of long-term incentives this November would also be closely watched and would see discounted payments to executives.
Lower executive pay has been a theme at several big Australian miners, most notably at BHP Billiton where the board chose to deny executives 35 per cent of the long-term incentive payments they had technically earned.
The decision to reduce those payments was made because ordinary BHP shareholders had gone backwards in terms of total shareholder returns over the same period. BHP chief executive Andrew Mackenzie voluntarily reduced his package even further.
Rio Tinto chairman Jan du Plessis has also been outspoken on executive pay, saying in July 2012 the business community must not lose touch with ordinary society.
Frequently Asked Questions about this Article…
Newcrest cut Greg Robinson's pay largely because the company had a very poor 2013 financial year. Management withheld short-term bonuses after missed targets, a major slump in the gold price, large asset write-downs and restructuring costs, and a market disclosure crisis that hurt the business and its share price.
Greg Robinson's total remuneration fell from $3.69 million in fiscal 2012 to $2.73 million in fiscal 2013, driven mainly by the absence of short-term incentive payments.
Newcrest reported a net loss of US$5.77 billion in FY2013 after more than US$6 billion of asset write-downs and restructuring costs, according to the company.
Newcrest's share price slumped from about $23.50 to around $10 during fiscal 2013. The fall was linked to missed operational targets, a major slump in the gold price and a market disclosure crisis in June that attracted an ASIC investigation.
Newcrest's short-term incentives can be reduced or withheld depending on annual performance — in FY2013 some executives received less than 8% of their short-term incentives. Long-term incentives are measured over a three-year period and vest in November each year; the company said upcoming vesting would be closely watched and likely discounted.
No. The board said the company's poor FY2013 performance convinced them they could not offer CEO Greg Robinson a pay rise when they review remuneration in October.
Lower executive pay has been a broader trend at several large Australian miners. For example, BHP Billiton's board denied 35% of long-term incentive payments that had technically been earned, and BHP's CEO Andrew Mackenzie reduced his package further. Rio Tinto's chairman has also spoken publicly about executive pay and business responsibility.
Everyday investors should watch Newcrest's upcoming long-term incentive vesting in November, any further updates from the ASIC investigation into the June disclosure incident, and whether operational improvements translate into stronger cash flow and shareholder returns — all of which influence executive pay and the company’s stock performance.
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