More Canadian mining CEOs join the millionaires club in 2011
Every year, Coopers Consulting and PwC produce an annual Mining Industry Salary Survey, and it would appear that the majority of Canadian mining execs have seen their hard work pay off tremendously two years in a row.
Compensation for top executives is a good indicator of the sector’s performance, and mining CEOs are still riding a wave of high salaries and cash bonuses in 2011. This has been driven by overall strong company performances and strong prices for certain commodities over the past year. Moreover, many CEOs have hit the symbolic million-dollar mark when it comes to overall compensation.
In 2011, the average annual base salary for Canadian mining CEOs grew to $486,000 from $480,000 in 2010. The majority also qualified for short-term incentive compensation, such as a cash bonus. The survey data shows that out of the 95% of CEOs who were eligible for cash bonuses, 85% reported receiving a payout. Percentage-se, bonuses averaged 76% of base pay, translating into an average payout of $412,000-albeit, a decrease from the $540,000 reported in 2010.
The average total cash compensation packaging, including annual base salary and cash bonus, was $826,000, which is close to $840,000 seen in 2010 and well above $670,000 reported in 2009. Despite the slight dip in average total compensation, however, there was a rise in Canadian mining CEOs earning in excess of $1 million:
- 56% (compared to 52% in 2010 and 51% in 2009) have annual compensation packages (base pay + bonus + equity-based pay) over $1 million
- 35% (compared to 32% in 2010 and 22% in 2009) have annual compen
sation packages (base pay + bonus packages) over $1 million
- 10% (on par with 2010 and 9% in 2009) have an annual base pay in excess of $1 million.
The study also found compensation is improving for those lower on the corporate ladder. In 2011, across the full range of salaried staff positions found at a mine site, 80% of positions were eligible for some form of incentive plan, such as an annual cash bonus, gainshare plan or productivity improvement plan. This is a philosophical change from as recently as 2002 when eligibility rates hovered just below 60%.
Job seekers are also benefitting from high starting salaries. For instance, new graduate mining engineers can reasonably expect a starting salary in the range of $70,000-a figure that jumps to $75,000 after one to two years of experience. Fierce competition for talent is driving up compensation costs for mining companies, and mining professionals are in a position to cash in.
In such a strong year where commodity prices like gold shattered records, some may wonder what’s in store for next year. Predicting whether salaries will go up or down in the year ahead would be akin to looking into a crystal ball. As salaries and annual bonuses, especially, are tied to company and market performance, they can fluctuate wildly. The Canadian mining sector is overall very stable and in a position for growth, but the potential for lower demand for commodities amidst the confused capital markets could put a lid on compensation levels.
For a full copy of the Coopers Consulting-PwC 2011 Mining Industry Salary Survey.
Len Boggio, Senior Partner, PwC’s Mining Practice and L.G. (Lou) Vujanich, Partner, Coopers Consulting Ltd.
Comments