Trade union Solidarity said in a statement on Thursday that mining group Kumba Resources (KMB) had set a “bad example” due to the extent of the increase in the packages of its directors, while at the same time seeking to retrench workers.
Solidarity proposed on Wednesday, in its emergency plan to halt the retrenchment crisis in South Africa, that the remuneration of company directors should be cut by between 30% and 50% and that this amount be deposited in an emergency fund.
In terms of Kumba’s 2004 annual report, the salary of Kumba Chief Executive Con Fauconnier was increased by 18% over the 18 months up to December 2004, Solidarity said.
In the meantime the company’s directors obtained further increases in income by exercising share options.
In total, the salary packages of the four executive directors increased by an average of 89% over the 18-month period, Solidarity stated.
The chairperson of Kumba’s board, Dawn Marole, received an increase of 120% in total. The cost of directors’ remuneration showed a threefold increase on 2003, according to the union.
“It is true that the company’s performance showed a slight improvement, with earnings before interest, tax, depreciation and amortisation or Ebidta at 4% higher from 2003 to 2004. The improvement was less than had been expected, however, particularly in view of the higher prices paid for iron ore,” Solidarity said.
Kumba has issued a Section 189 restructuring notice to trade unions to announce the company’s plans to retrench 400 workers.
Solidarity has no problem with remuneration that matches the performances of the directors and the company, but excessive increases, followed by retrenchments, cannot be justified, Solidarity’s economist Lullu Krugel said.
“In view of its financial performance and the remuneration received by its directors, Kumba should certainly not be considering the retrenchment of staff.
On the contrary, the company should be talking to trade unions about signing a moratorium on retrenchments. With the massive expansion being planned by the company, it should rather be recruiting more staff.
Workers are currently receiving mixed messages: large bonuses are paid to directors and the company’s financial results look good, but at the same time workers are losing their jobs,” Krugel added. — I-Net Bridge