Executive Remuneration Report 2019
Compiled by Richard Fortune, AltoPartners Australia Director and co-head of the AltoPartners Global Resources practice group
Each year we analyse demographics and remuneration profiles of over 20,000 directors and executives of publicly listed mining, oil and gas companies across Australia, Canada, USA and United Kingdom, and we produce a simple remuneration benchmarking guide for our clients, aggregating:
- Fixed remuneration by market capitalisation;
- Variable remuneration by market capitalisation; and
- Key insights on board and executive team demographics, demand and composition.
You can download the guide here.
It has been another year of cyclical recovery for the resources sector. Mergers and acquisitions are on again, higher cost operations have restarted, projects are being revived and competition for resources executives continues to increase. However, the recovery has not been uniform, with marked differences between commodity groups, and between explorers and producers.
Juniors in the slow lane
Majors and mid-tiers are building cash reserves and rewarding shareholders with dividends. Their attention has turned to selective mergers and acquisitions, but this has not yet led to a broader recovery amongst the juniors. Explorers and developers on the other hand, have been hampered by skittish equity markets, and even those with credible projects have been at the whim of short-term traders. In the absence of market support, private equity, joint ventures and farm-in deals and offtake partnerships have become a lifeline for credible projects and credentialed teams.
A staggered start
Reflecting on each commodity group, bulk materials have been more resilient than expected and this sub-sector continues to absorb good operational management. Talent shortages have been particularly acute in coal, with a reemergent mid-tier ramping up higher cost assets. Gold and base metals producers, particularly those with smaller operations are finding it increasingly difficult to compete for talent against larger operations. The battery metals sector has spurred activity in greenfield development and the narrative continues despite a recent drop in prices. While slow to turn, the oil and gas sector appears to be gathering pace with selective hiring across the board.
Middle management in demand
On the whole board and executive remuneration has remained restrained. At the board level, shareholders remain vigilant and wary of corporate overheads returning to boom time levels, and there is sufficient slack in the market to keep board and executive remuneration expectations in check.
However, demand for operational and technical management is growing. We are seeing acute shortages and upward pressure on remuneration. A generational shortage is appearing, with the pipeline of graduates and undergraduates severely diminished from the downturn. This will present future challenges.
While technology and automation are alleviating some of this pressure, this has not reduced the need for good people, rather they have new roles and new problems to solve. We expect remote technology to draw many of the best and brightest away from operational line management over coming years, as the work is interesting and offers lifestyle and flexibility. Demand will remain strong for operational line managers into the foreseeable future, until such roles themselves are automated.
As mergers and acquisitions appetite returns, we are seeing internal business development teams being rebuilt and the hiring of resources professionals back into the investment banks. We expect this trend to continue, and to drive the mergers and acquisitions cycle further. It is evident pay increases are ahead, starting with your employees.