THE 25 per cent pay cut that the Paladin Energy boss, John Borshoff, imposed on 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 last month when he announced plans to temporarily cut his $2.52 million remuneration package to $1.89 million as part of a cost-cutting drive within the corporate division of the uranium miner.
"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 one year, but when asked if he would extend it into future years, Mr Borshoff said "If it justifies it, yes."
While remuneration of almost $2 million is still pretty good in a company that doesn't turn a profit, Mr Borshoff says he will notice the change to his hip pocket. "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," he said.
Criticism of Paladin and Mr Borshoff has been intense and personal over the year, as a series of missed targets added to the pressure that uranium stocks came under following the Fukushima nuclear disaster.
The fund manager Perpetual listed "management quality" among its reasons why Paladin did not meet the investment criteria for their global resources portfolio. And 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 sort of 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 there.
"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, fewer consultants will be used right across the board."
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, but already there are encouraging signs. Last week the sector enjoyed its best week since the Fukushima disaster, with uranium prices rising and the Prime Minister, Julia Gillard, throwing her support behind the push to overturn the ban on sales to India.
Paladin shares have risen from an October low of $1.11 to close at $1.50 on Friday but are 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 how big was it?
John Borshoff voluntarily cut his remuneration by 25%, reducing his package from about $2.52 million to $1.89 million. The cut was announced as part of a corporate cost‑saving drive at Paladin Energy.
How long is John Borshoff’s pay cut intended to last and could it be extended?
The pay cut was imposed for one year, but Mr Borshoff said he would extend it beyond 12 months if the company’s financial situation justified doing so. Paladin has not specified the exact financial targets required for a return to full pay.
Why is Paladin Energy implementing executive pay cuts and other cost‑cutting measures?
Paladin is cutting costs to help salvage the company after a run of missed targets and industry pressure following the Fukushima disaster. Management hopes to save about $7 million at the corporate level, with roughly $0.5 million of that coming from the CEO’s cut, and plans to reduce travel, consultant use and other expenses.
What other cost‑saving actions are Paladin employees being asked to take?
Employees are expected to travel less and fly economy between operations in Australia, Canada and Africa. The company also plans to use fewer consultants and spread belt‑tightening measures across the whole organisation.
How have investors reacted recently to Paladin Energy’s outlook and share performance?
Paladin shares improved from an October low of $1.11 to close at $1.50 recently, although that remains well below the January high of $5.57. The uranium sector enjoyed its best week since Fukushima, which helped Paladin’s share performance.
Did any fund managers comment on Paladin’s management or investment suitability?
Yes. Fund manager Perpetual listed 'management quality' among the reasons Paladin did not meet the investment criteria for its global resources portfolio, reflecting concerns about the company’s leadership and execution.
Is Paladin Energy profitable and does that affect executive remuneration decisions?
The article notes Paladin is a company that does not currently turn a profit. Mr Borshoff acknowledged the pay cut will be noticeable personally and framed it as part of taking responsibility while wider cost cuts are implemented across the business.
What recent industry developments could improve the outlook for uranium companies like Paladin?
Uranium prices have risen and the sector had its best week since the Fukushima disaster. Political support, including Prime Minister Julia Gillard backing efforts to overturn the ban on uranium sales to India, has also been cited as a positive development for the industry.
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