THE 25 per cent pay cut that Paladin Energy boss John Borshoff imposed upon himself may be extended beyond its 12-month term, if such drastic measures are needed to salvage the company.
That pledge from Mr Borshoff, the company founder, comes as Paladin employees prepare to reacquaint themselves with the economy-class cabin when flying between the company's operations in Australia, Canada and Africa.
Mr Borshoff surprised the market in October when he announced plans to temporarily cut his $2.52 million remuneration package down to $1.89 million as part of a cost-cutting drive within the corporate division of the uranium mining company.
"There is about a $7 million cut we are hoping to achieve at the corporate level, of which about half a million is mine. But still, that's a bit," he told BusinessDay.
The cut was imposed for just one year, but when asked if he would extend it, Mr Borshoff said: "If it justifies it, yes. It shows a bit of leadership."
While remuneration of almost $2 million is still pretty good within a company that doesn't turn a profit, Mr Borshoff says he will naturally notice the change to his hip pocket in the months ahead.
"You are used to so much, and to just say 'I will do it', it takes a fair bit of will. It's like a house, no matter how big your house is, you fill it up."
Criticism of Paladin and Mr Borshoff has been intense and personal throughout this year, as a series of missed targets added to the pressure that all uranium stocks felt in the wake of the Fukushima nuclear disaster.
Funds managers Perpetual listed "management quality" among their reasons why Paladin did not meet the investment criteria for their global resources portfolio, while one Paladin shareholder was asked to refrain from using aggressive references after he wrote a letter to the company suggesting that Mr Borshoff and his executive colleagues should be "lynched".
Despite that pressure, Mr Borshoff said the decision to take the pay cut was his.
But nor will the boss be carrying the full load of belt-tightening at Paladin. "It can't sit there as an outlier," he said.
"Other people are expected to take some [action], maybe travel less or do less and I think it just spreads that weight across the whole group. People will be travelling economy, there will be a whole lot of issues, less consultants will be used right across the board."
Spending on exploration will also be slowed, but Mr Borshoff said there was one aspect of the balance sheet that he was determined to protect from the razor gang. When asked if his fellow executives would be asked to match his 25 per cent pay cut, Mr Borshoff said: "No and I wouldn't expect them to."
Paladin has not revealed what shape the company's finances will need to be in for Mr Borshoff's pay to return to its full level next financial year, but already there are encouraging signs.
Paladin shares have risen from their October low of $1.11 to close at $1.50 on Friday, but still well below the January high of $5.57.
Frequently Asked Questions about this Article…
What pay cut did Paladin Energy boss John Borshoff take and for how long?
John Borshoff temporarily cut his remuneration by 25%, reducing his package from about $2.52 million to $1.89 million. The cut was imposed for one year, although he said it could be extended if justified.
Why did Paladin’s CEO take a pay cut — is Paladin Energy trying to save money?
Borshoff said the pay cut is part of a broader corporate cost‑cutting drive to help salvage the company. Paladin hasn’t been profitable, faced missed targets and pressure on uranium stocks after the Fukushima disaster, so the move was framed as leadership and a way to reduce costs at the corporate level.
Will other Paladin executives be required to match John Borshoff’s 25% pay cut?
No. Borshoff said he would not expect his fellow executives to match his 25% reduction. However, he expects other cost‑saving measures across the group, such as reduced travel and less use of consultants.
How will Paladin’s cost‑cutting affect day‑to‑day operations and staff?
The company plans to spread the cost‑savings across the business: employees may travel economy between operations in Australia, Canada and Africa, consultants will be used less, and spending on exploration will be slowed.
Could John Borshoff extend his pay cut beyond the initial 12 months?
Yes. When asked if he would extend the 12‑month pay cut, Borshoff said, 'If it justifies it, yes.' Any extension would depend on the company’s financial situation.
How have Paladin Energy shares performed recently amid the cost‑cutting news?
Paladin shares rose from an October low of $1.11 to close at $1.50 on the Friday reported in the article, but they remained well below the January high of $5.57.
What criticisms has Paladin Energy and John Borshoff faced this year?
The company and Borshoff have faced intense and sometimes personal criticism after a series of missed targets and industry pressure following Fukushima. Funds manager Perpetual cited 'management quality' as a reason Paladin didn’t meet its investment criteria, and at least one shareholder wrote an aggressive letter to the company.
Has Paladin said what financial targets must be met before Borshoff’s pay returns to normal?
No. Paladin has not revealed the specific financial condition or targets that would trigger a return of Borshoff’s full pay. The company did note some encouraging signs, such as the recent uptick in the share price.
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