Base Resources CEO earns Sh100m despite loss

Money Markets

A Base Resources titanium mine in Kwale. PHOTO | FILE 

By GEORGE NGIGI, gngigi@ke.nationmedia.com

In Summary

• Base Resources has disclosed that the managing director Tim Carstens received a total package of Sh105 million that included basic salary, performance bonus and share options.
• The Australian firm posted an after-tax loss of Sh1.6 billion but recorded better revenues following increased exports.

The chief executive of mining company Base Resources was paid a bonus of Sh35.4 million last year, bringing his total pay to more than Sh100 million even as the company posted losses.

The financial report of the listed Australian firm, whose main project is mining of titanium ores in Kwale, disclosed that the managing director Tim Carstens received a total package of Sh105 million at the current exchange ($1 million) that included basic salary, performance bonus and share options.

The company posted an after-tax loss of Sh1.6 billion but recorded better revenues following increased exports. Australian Base Resources becomes the first company in the country to give an explicit breakdown of its executive remuneration, among listed and private companies, underlining the gap between global standards and local practices.

Mr Carstens received a basic monthly pay of Sh3.5 million and a performance-based pay of Sh35.4 million. He also received shares worth an estimated Sh23.3 million.

Salary of key management of the mining company comprise a fixed and variable remuneration with the latter pegged on individual and company performance.

“If overall company performance fails to meet a minimum standard, no executives will be entitled to receive any at-risk remuneration. For all executives, it is therefore possible that no at-risk remuneration will be earned and that fixed remuneration will represent 100 per cent of total remuneration,” said the company in its annual report.

READ: Base sinks into Sh1.6bn loss on rising operating costs

But in case the desired performance is achieved, the fixed pay is expected to contribute 36 per cent of the executive pay with the bulk pegged on performance.

There are no Kenyans in the company’s top management. The company has 800 employees of whom 42 are expatriates.

The managing director is not the highest paid in the company wage bill as the general-manager operations gets a monthly pay of Sh4.5 million while general-manager environment and community affairs gets Sh3.8 million. The managing director however has a higher bonus pay.

Recommendation by the Capital Markets Authority (CMA) to have public companies disclose the pay structures of their executives in annual report was rejected last year, with companies pitching for status quo.

Currently companies declare a lump-sum declaration of the amount paid to top management, making it an onerous task to determine each executives pay.

Listed investment company Centum operates on a similar remuneration model to Base Resources where the bulk of an employee’s pay is performance based.

Centum, paid its employees bonuses of Sh1 billion this year, being an average of Sh11.1 million an employee following a strong financial performance.

The bonus for Centum’s staff is paid out over a three-year period on condition that the shareholders wealth is maintained.