[miningmx.com] — LONMIN CEO Ian Farmer had to let go of some R3m’s worth of company shares previously allotted under incentive schemes in the last two months, following the platinum miner’s failure to meet a set of performance targets.
Lonmin said on Tuesday the grant for 15,718 shares to Farmer on January 7 2009 lapsed on Saturday. The shares were granted under the company’s long term incentive plan for directors and were worth around R1.9m based on Tuesday’s closing price of R123.25 per share.
Farmer has also seen 9,296 performance-based shares lapsed in December, worth another R1.1m.
Lonmin’s long-term incentive plan comprises two separate parts: For awards made prior to 2010, 50% is subject to the company generating total return for shareholders (TSR) relative to a group of 20 mining and metals companies over a three-year period. The company had to meet or better the median TSR performance, which in this occasion it had failed to do for the three years to October 31 2011.
Among those 20 companies which make out the benchmark are African Rainbow Minerals, Exxaro Resources, Rio Tinto, Anglo American, AngloGold Ashanti, Aquarius Platinum as well as Xtrata, according to Lonmin’s 2011 annual report. The list has been narrowed down to Anglo American Platinum, Impala Platinum, Stillwater Mining,
Aquarius Platinum as well as Northam Platinum for grants made since 2010.
The other 50% was subject to a share price test over the three years ending October 2011 in which the company had also performed below the threshold level.
A key date for Farmer’s fortunes would be September 14, when another 57,152 shares under the incentive scheme matures. These would be worth around R7.04m based on Tuesday’s closing price.
According to Lonmin’s annual report for 2011, Farmer’s total remuneration for the financial year amounted to £1,220,629 (around R15.3m at current exchange rates), which consisted of £565,000 as a salary, £148,639 for benefits in kind, £203,400 for payment in lieu of pension, £283,065 as an annual bonus and £20,525 in dividend equivalents paid in cash on the vesting of share awards.
Farmer has been granted 205,849 incentive shares since his tenure as CEO of Lonmin started, prior to the current financial year, and of these 37,501 had lapsed and 1,087 had been granted.
Not unlike other PGM producers, Lonmin’s shares have hit the doldrums in 2011. It started the year on R205 per share, only to see it losing close to 40% in value by end-December despite an improved operational performance.
