David Hathorn, CE of pulp and paper group Mondi, took a 4,1% cut in his package last year. That was a year in which Mondi increased underlying profit by 36% to R6,3bn and raised its dividend by 30%.
Ralph Boëttger, boss of rival pulp and paper producer Sappi, saw his package more than double. Sappi's accounts make it hard to understand whether the group is running at a profit or a loss, littered as the numbers are by exceptional items. But the generous increase came in a year in which Sappi was closing mills and retrenching staff, even at its head office in Johannesburg. Sappi is not yet paying a dividend.
At first glance an outsider might think the respective decrease and increase should have been the other way around. But there are reasons that go beyond the usual explanations written by remuneration committees.
It's worth noting that while the Mondi boss's package was reduced to £1,77m from the previous year's £1,85m, Mondi employees in Europe received an average increase of 4% and in SA of 7%. So why was Hathorn's package cut?
It had nothing to do with Mondi's financial performance. The group failed to meet internally set safety standards, so the man at the top took the rap, mainly through a reduction in his bonus (see table). Mondi shareholders should be pleased with the raised dividend payment but also because the group takes safety at its mills very seriously.
Boëttger's increase is also easy to understand. Though still struggling in comparison to Mondi, the group has slowly improved its financial performance on his watch. The big kick to his overall package came from a "performance payment" of US908619. In the previous year he received no performance payment.
Still, it must irk retrenched staff to see the boss getting a large increase while they have lost their jobs.
Source: Financial Mail
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