JOHANNESBURG (miningweekly.com) – To reduce operating costs and conserve cash resources amid a “difficult” operating environment, Aquarius Platinum plans to reduce nonexecutive directors’ fees by 10% and slash the salary of CEO Jean Nel by 30%.
In terms of an unsolicited proposal submitted by Nel to the board on July 3, the Aquarius head would receive about 70% of his salary and any applicable bonuses he may receive over the next three years, starting from July 1, in shares instead of cash.
The number of shares to be issued to Nel would be fixed at 708 000 a year and set at $0.62 a share, being the volume-weighted average price of the share price on the London Stock Exchange in June 2013.
Any shares issued as part of a bonus would be issued on the same terms.
“Further, Nel has, for the second consecutive year, asked not to be considered for a salary increase in 2014,” the platinum miner said in a statement on Monday.
Nel’s proposal has been unanimously approved by the company’s remuneration committee and board, but remains subject to shareholder approval.
Meanwhile, in a similar cash-reduction initiative, Aquarius directors would be offered 25% of their remaining director fees in shares in lieu of cash.
The number of shares would be calculated by dividing 25% of the residual fee by the simple average of the share price over the preceding calendar quarter, with
the first affected payment due on March 31, 2014.
The proposal to amend directors’ fees also remained subject to regulatory and shareholder approval at the company's annual general meeting in late November.
In addition to the proposed overhaul of the salaries and fees of its upper management, Aquarius would, at the November sitting, present a directors and employee share plan proposal to shareholders, which would allow participants to acquire shares in the company by way of a salary sacrifice at set terms and conditions.
“This plan will act as a quasi long-term incentive plan and reduce the cash component of the remuneration of participating individuals. Participants will be entitled to sell some of the shares issued to them to the extent that it is required to cover any taxes due by the participant,” the company explained.
The board said the implementation of the share plan, the proposed reduction in the cash component of Nel’s salary, as well as the proposed amendments to nonexecutive directors' fees demonstrated an acknowledgement of the difficult operating conditions and the need for restraint.
“The initiatives detailed above, as well as other corporate cost saving initiatives, will reduce Aquarius' cash corporate costs in excess of 50% to below $6-million a year,” the company noted.
News of the restructuring plan follows an “exceptionally challenging” financial year, in which the miner had to close loss-making mines, faced industrial action and implemented an owner-operator model at its Kroondal mine.
In August, the ASX- and JSE-listed metals producer, which operates in South Africa and Zimbabwe, posted a net loss of $288-million and announced a $226-million impairment charge, after writing off another $99-million in the second half of the financial year ended June 30.