CEOs of Canadian mining companies have seen year-over-year increases in salaries, despite a slowdown in the industry according to a survey produced by Coopers Consulting Ltd. (Coopers Consulting) and PricewaterhouseCoopers LLP (PwC).

Average annual base pay for Canadian CEOs this year rose to $484,000 compared to $443,000 in 2007. However, the average Canada-wide bonus paid to CEOs declined from 79% in 2008 to 61% of the annual base pay in 2009.

Ninety-three per cent of Canadian CEOs at mining companies were eligible for short term incentive compensation (i.e. an annual cash bonus), but of the 54 companies reporting CEO salaries, only 34 (or 63%) reported actual cash bonus payouts.

The highest reported CEO cash incentive percentage amount was 104% of base pay.

The average actual CEO cash bonus payout reported was $303,000 and the average total CEO cash compensation package (annual base salary plus cash bonus) was approximately $670,000.

“Of significance is the fact that the data for the years 2005 – 2008 shows the actual percentage increase of incentive granted to CEOs was above target in each of those years. But this trend did not carry forward to the current year,” says Lou Vujanich survey leader and Principal of Coopers Consulting. “For the first time since 2005, the proportionate amount of the annual incentive component has decreased likely reflecting that actual performance over the most recent performance measurement period has been below expectations.”

The Coopers – PwC surveys this year covered 44 typical corporate mining office positions, 58 salaried mine site positions and 11 field exploration positions. The 2009 salary survey database contains information on 13,676 individuals–6,160 from Canada and 7,516 from the United States. In total, 250 North America mine sites are represented in the 2009 update (107 in Canada and 143 in the U.S.).

When it comes to Canadian mine site staff, over 80% of mine site salaried positions are eligible for some form of short-term incentive plan, an increase of 21% since 2002 (59%). The average such bonus paid (across all mine site salaried staff positions) was 15%, a decline of only 2% since 2008.

“The percentage of Canadian salaried mine staff who are eligible for bonuses has increased steadily since 2002,” says Len Boggio, survey report contributor and senior partner in PwC’s mining practice. “This is a good sign, demonstrating that despite the current economic climate the industry recognizes the importance of graduates entering the mining sector, recruiting new talent and retaining top performing staff.”

A comparison of Canada-wide mine site average total cash compensation shows the average overall movement of the total cash compensation salary line for 2009 was only 1.45% (across all mine site positions) over 2008 (compared to 6.0 % in 2008 over 2007 and 3.4% in 2007 over 2006), a reversal of the data from 2008 which at the time showed average total cash compensation increases to be greater than the average increases in annual base pay.

Boggio adds, “Canadian mining companies are facing tougher times, and steering a path through this downturn has required that this industry make changes like any other. In the current climate there is no more valuable an asset than cash, and for cash rich companies, opportunities exist as asset values fall. Options for this group of companies continue to include acquisition or organic growth.”

IE