CEOs from Cleveland-Cliffs, Newmont Mining and Freeport McMoRan were the highest paid in the industry in 2017 according to a new report from the Bedford Consulting Group.

Lourenco Goncalves, the CEO of Cliffs, took home $23.7 million in 2017, making him the highest paid mining CEO. Newmont CEO Gary Goldberg, Richard Adkerson from Freeport, Don Lindsay from Teck Resources and Nutrien CEO Chuck Magro followed closely behind with salary and incentives totaling between $12.6 million and $17.9 million.

Despite those blockbuster numbers, the report showed that executive pay has, on the whole, plateaued. According to the report, which surveyed 184 mining companies listed on the Toronto Stock Exchange or New York Stock Exchange that range from less than $100 million in assets to more than $20 billion for executive and board member compensation trends, found that in the last five years CEO compensation has remained fairly level in all asset classes. In companies with more than $20 billion in assets, for example, the median CEO salary was $1.4 million in 2017, in comparison to $1.5 million in 2013; for miners with assets between $500 million and $1 billion, the median was $500,000 in 2017 and to $519,000 in 2013.

“We’ve looked at compensation for the ninth year now, and when you compare this to where compensation levels were in 2013, it’s safe to say compensation is fairly flat,” said Frank Galati, Bedford’s managing partner, in an interview. “In the case of mining CEOs, the base compensation is somewhat down, and [other executive officers] are relatively flat or slightly up.” Total compensation, however, did rise an average of six per cent across the full range of companies as compared to 2016.

Galati said compensation trends are mirroring the state of the industry. “We’re off the bottom now, that’s for sure, but miners are still struggling,” he said. “Especially the juniors and those under $1 billion in market cap, they’re having trouble raising capital, commodity prices are down and there’s not a lot of investor interest in mining these days.”

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The report also found that 56 per cent of CEOs received an annual bonus in 2017, and that every CEO of a company with an asset value of more than $500 million received both an annual bonus and long-term incentive program awards. 

“Where the real money is made is in performance bonus and equity,” Galati said. “Those executives and organizations that have performed [well] seemed to do quite well.”

However, fat executive pay cheques have started to prompt investor backlash, particularly when they do not align with company performance.

In 2015, Barrick chairman John Thornton committed to revamping the company’s executive compensation system, which at the time increased his pay by 35 per cent, to US$12.9 million, after shareholders voted overwhelmingly against salary increases for company executives. (According to the Bedford report, Thornton is the highest paid executive chairman in the industry, with a 2017 salary of $9.999 million.)

More recently, proxy advisory firm Institutional Shareholder Services Inc. recommended in 2017 that Newmont shareholders vote down an increase in pay to company CEO Goldberg based on Newmont’s “significant stock price decline.” Shareholders went on to approve Goldberg’s increase by a margin of 67 per cent.

Bedford, which also examines mining governance trends in its report, said companies and their compensation committees should be prepared to comment on any inconsistencies.

“Organizations need to be transparent…in how their executives are being rewarded,” Galati said. “And I think they should allow their shareholders a greater voice in determining whether compensation practices are correct.” The report noted that approximately 22 per cent of the companies surveyed had “Say on Pay” votes in their proxy circulars in 2017, which was a slight increase from 20 per cent in 2016. Those votes allow shareholders to be a part of determining executive and board compensation.

Larger companies have generally been the first movers for Say on Pay votes – 46 per cent of the companies that have them had assets of more than $1 billion.

“I view it as two solitudes. Those organizations that are under $1 billion in asset values are more concerned about survival, the future, raising capital and keeping their costs down,” Galati said. “With organizations with more than $1 billion, there’s more emphasis on governance.”

The Bedford report found that the mining industry is still a laggard in board and executive diversity. Only 29 per cent of the companies surveyed had one or more woman in an executive officer or vice-president role – a slight decrease from 30 per cent in 2016.

Notably, however, one area that women are well-represented is in finance: 43 per cent of mining company CFOs are women. As well, three of the industry’s best paid CFOs are women: Kathleen Quirk from Freeport McMoRan, Nancy Buese from Newmont and Catherine Raw from Barrick.

Galati said that over almost a decade of producing the report, Bedford hasn’t seen the needle move on diversity, and “that’s a concern for us…[mining] is crawling toward parity, we’re so many years away from it.”

He said one way mining companies can start to see more gender diversity is to insist that the pool of candidates for director and executive officer positions contains more women, and to be open to different employment backgrounds. “More organizations, especially the smaller ones, need to take a broader approach,” he said.