Executive pay heads skyward when stock options exercised

Despite a year of modest metal and mining share price increases, documents filed with the U.S Securities and Exchange Commission (SEC) indicate that several mining executives are earning compensation in the million-dollar range. In fact, mining company personnel rank in the top four of Canada’s most highly paid executives, according to recent surveys. Companies that do not file with the SEC are not included in the surveys.

“Mining companies are renowned for paying (their executives) well,” said Graham Wallace, partner in Wallace, Bond and partners, a Toronto-based relocation counselling firm. “They are characteristic of the resource industry.”

Stock options constitute a large part of these payment packages. When executives decide to cash in options granted, compensation can soar significantly.

For example, Jeremy Garbutt, executive vice-president and chief financial officer for American Barrick Resources (TSE), earned $250,000 in 1989, but he cashed in $1.8 million in options, sending his overall compensation package over the $2-million mark.

LAC Minerals (TSE) President Peter Allen was paid $300,311 in 1989. Had he cashed in some of his 3.3 million common shares and options, his compensation would have been more substantial.

On the other hand, Inco’s top executive Donald Phillips earned $2.1 million, of which only $434,000 was the result of stock option cash-ins. The rest, aside from a base salary of $482,000, came from cash and stock bonus awards.

In most cases, executive salaries in the mining business are tied to overall company performance. Net income for American Barrick increased to $35.8 million in 1989 from $30.5 million in 1988, while Inco’s earnings jumped $18 million to $753 million.

Both American Barrick and Inco declined comment on the compensation packages awarded to their top executives.

Based on SEC filings, the top 10 wage earners for the mining industry in 1989 are: Company Executive Position Compensation Inco *Donald Phillips Chairman, CEO $2.1 million American Barrick *Jeremy Garbutt Executive VP $2.1 million American Barrick *Robert Smith President, COO $1.9 million Corona *Peter Steen President, CEO $1.7 million Echo Bay John Zigarlick President, CEO $941,681 Echo Bay Richard Kraus President $859,900 Placer Dome Anthony Petrina President, CEO $723,906 Echo Bay Robert Calman Chairman $685,175 Plexus Resources Arthur Ditto President, CEO $321,493 LAC Minerals Peter Allen President, CEO $300,311 *Ranked at the top of Canada’s most highly paid executives for all sectors.