Kenmare Resources investors urged to reject share bonus plan

Advisory group ISS says rationale for potential move not ‘particularly compelling’

Michael Carvill , managing director of Kenmare Resources. The   company  plans to increase possible executive stock awards under a restricted share plan to 100 per cent of salary from 75 per cent currently.  Photograph: Bryan O’Brien

Michael Carvill , managing director of Kenmare Resources. The company plans to increase possible executive stock awards under a restricted share plan to 100 per cent of salary from 75 per cent currently. Photograph: Bryan O’Brien

 

Shareholders in Kenmare Resources have been urged by a leading advisory company on corporate governance to vote against the mining company’s pay policy at a meeting this week as it seeks to increase potential executive share bonuses.

The Irish company, which operates the Moma Titanium Minerals Mine in northern Mozambique and is led by managing director Michael Carvill, plans to increase possible executive stock awards under a restricted share plan to 100 per cent of salary from 75 per cent currently.

“The rationale for the increase is not considered to be particularly compelling in view of the company’s performance since the last policy vote and the overall quantum of the variable pay package, which is already competitive for a FTSE SmallCap constituent given that the [restricted share plan] is not subject to conventional performance conditions,” said proxy advisory group Institutional Shareholder Services (ISS).

The company’s annual general meeting is due to be held on Wednesday. ISS said that shareholder support for the remuneration policy, which is subject to a non-binding vote, “is not considered warranted”.

Bonuses

Mr Carvill’s total remuneration fell 12.6 per cent last year to $1.44 million (€1.33 million), driven by a reduction in cash and stock bonuses, as a drop in the company’s share price hit total shareholder returns, even as it proposed a maiden dividend. Earnings before interest, tax, depreciation and amortisation for the year were broadly flat at almost $93 million (€85.9 million).

Kenmare moved early last month to suspend its guidance for this year due to the uncertain outlook caused by Covid-19, saying that while its mine had not been materially affected, the operational impact of the pandemic was unclear.

A spokesman for Kenmare said the group’s remuneration policy was developed in consultation with major shareholders and the support of independent advisers.

“The new policy has introduced a performance underpin which significantly increases the level of control that the remuneration committee has to determine overall remuneration of executives,” he said. “This is in addition to an increase in holding periods as well as discretionary protections and clawbacks. The new policy is balanced and fair to both shareholders and executives.”

Awards under the share bonus plan are restricted, with 60 per cent vesting on the third anniversary of date they are granted, and the remainder vesting over the two subsequent anniversaries. The shares must be held for a further two years after they vest.