AltoPartners: Executive Remuneration Report 2018 For Global Resources Sector
AltoPartners released the 2018 Executive Remuneration Review for the Global Resources Sector, examining demographics and remuneration profiles of over 20,000 directors and executives of publicly listed resources companies across Australia, Canada, USA, South Africa and United Kingdom.
Here are the key report findings in relation to Australian (ASX) listed mining, oil and gas companies:
- Increased hiring is yet to put significant upward pressure on fixed remuneration for executives.
- Aggregate data shows a negligible increase to headline fixed remuneration (1%), but significant uplift of variable remuneration due to achievable hurdles and vesting conditions.
- Women remain underrepresented at board level (8% female) and executive level (10% female), however there is a significant increase since last year (8% to 10%) of female non-executive directors. The most underrepresented functions are Chairman (2%), CEO (3%) and Chief Operating Officer/Head of Operations (2%).
- In terms of industry diversity at a board and executive level, many are aware of the impending disruption of traditional domain-oriented roles like COO through automation and digitisation. There is talk of importing cross-sector experience to pioneer this change, however the reality is that few are willing to navigate unchartered waters. The functional roles such as Chief Financial Officer and, Head of Business Development remain the business functions to import cross-sector experience and skill sets.
- Non-Executive Chairmen and Non-Executive Directors, particularly among the smaller companies are staying longer (4 to 4.5 years on average). With the upturn imminent, those boards who have not already renewed direction and commitment will likely be the target of activist shareholders. Fresh capital will require fresh thinking, and the onus is on boards to pursue this.
- From a hiring perspective, the recovery has been evident across the board, led by precious metals, bulk materials and base metals.
- Oil and gas is approaching the bottom of the cost-down and restructuring phase. Producers have learned to do more with less people, so we expect new cost structures will subdue the executive market for some time.
- Resumption of M&A and the return of internal business development teams in base metals.
- The battery minerals narrative has continued to gain momentum, with speculative fervour amongst lithium and cobalt juniors aspiring to break into concentrated and vertically integrated markets. This activity, mainly in exploration, has absorbed many executives and experienced geologists from the downturn years.
- Many bulks producers, including iron ore, coal and manganese have returned from selling or almost selling key assets at the bottom of the cycle. They are now scrabbling to recruit back key operational management.
- In the juniors and mid-caps, institutional money is re-entering the market, restarting previously stalled projects and operations and bringing change of control and new management to existing projects and operations. This has led to a wave of hiring at board, executive and middle management levels, through all functions.