The great R1.2m divide

2012-08-25 09:06

Lonmin’s annual report shows outgoing CEO earned about R1.2m a month last year while a rock driller earned on average R10 500 a month in a total-cost-to-company monthly package

Three top executives at Lonmin earned the same last year as the combined salary packages of more than 3 600 rock-drill operators, whose strike for higher pay led to a bloody massacre last week.

It will take a Lonmin rock driller – who earns on average R10 500 in a total-cost-to-company monthly package – almost a decade to earn what the company’s chief executive earns in a month.

Most of the Marikana strikers were rock drillers.

Outgoing Lonmin chief executive Ian Farmer, former chief financial officer Alan Ferguson and financial officer Simon Scott, who was appointed the new chief executive this week, earned combined salary packages of R38 million last year, the company’s annual report shows. This excludes long-term share incentive options.

Lonmin’s yearly report shows Farmer earned about R1.2 million a month last year.

Ferguson’s earnings were similar, although most of his pay for last year was in the form of a year’s salary package payout after his job became redundant when it was moved to Johannesburg from London at the end of 2010.

Farmer earned more than R20 million in 2010.

In comparison, the 4 252 rock drillers in Lonmin’s employ will together earn total pay of about R44 million for this financial year.

David van Wyk, the chief executive of the Bench Marks Foundation, which conducted a recent study of working conditions at South African platinum mines, described the pay of the Lonmin executives as “shocking” and said the mine’s only obsession was about generating as much profit as possible.

But Adcorp labour economist Loane Sharp said both the rock drillers at the mine and Lonmin’s executives were paid “what they were worth”.

National Union of Mineworkers general secretary Frans Baleni said he was shocked too.

“The gap between the poor and the ones who are better off has been increasing. It is huge and morally indefensible,” he said.

Rock drillers maintained this week that they take home between R3 000 and R4 000 every month, despite figures that show that they earn more than that.

Figures from Solidarity and the NUM indicate that a rock driller at Lonmin earns a basic salary of R5 891 per month, but that the total cost-to-company package for each of them is R10 512 a month.

In order to earn this, a rock driller must work 22 eight-hour shifts a month and drill at least 70 holes per shift.

On top of his basic salary, every rock driller received a pension fund, a medical fund, a holiday bonus, a rock-driller’s allowance and a housing allowance for those not living in the hostel.

They also qualify for a group bonus and an individual bonus if they reach productivity targets.

In cases like that, workers can take home between R6 500 and R8 000. Workers that City Press spoke to this week insisted they took home between R3 000 and R4 000 a month.

One said: “At times I would get R3 000 and sometimes R4 000 a month, and that depends on what they have deducted.

“There are a lot of deductions on my pay slip that I don’t understand. I only ever see something like R10 000 when I go on leave once a year.”

Lonmin’s annual report shows that the mine’s directors cumulatively earned R48 million last year.

This while the company’s nine non-executive directors earned R9.6 million. Among them was ANC national executive committee member Cyril Ramaphosa, who earned R680 000 last year in director’s fees.

The rand value of last year’s Lonmin executive remuneration is based on 2011’s average exchange rate of R11.14 to the pound.

The current exchange rate is R13.30.

Sharp said Farmer had engineered the biggest increase in production in Lonmin’s history and his contribution to the mine’s success was reflected in his salary package.

He said that it was unfair to compare the salaries of executives and workers, and that rock drillers were relatively unskilled, easy to train and could be easily replaced.

But Van Wyk asked: “What does one want to do with so much money? Especially when your workers live in so much squalor?

“The mining bosses don’t care. I’ve spent lots of time in those communities and Lonmin has done very little to upgrade their living conditions. It is shocking how they live,” he says.

Van Wyk said rock drillers worked in dangerous conditions (six died last year) and were paid far too little for their contribution to the mine’s success.

Lonmin did not respond to requests for comment by the time of going to press.

Attempts to get comment from the Association of Mineworkers and Construction Union’s Jimmy Gama were unsuccessful.
The massive pay of Lonmin executives in SA

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