Magara gets R11m Lonmin shares

HARARE – Zimbabwe-born Lonmin chief executive Ben Magara has been awarded 230 604 shares — worth about R11 million at the current share price of R42 — to compensate him for the loss of various financial incentives meant to encourage him to stay with his previous employer, Anglo American Platinum (Amplats).

The financial incentive for Magara to succeed with his turn-around strategy at the troubled platinum group is huge. Doubling the share price to R80 would increase the value of his equity stake to about R22 million. Magara — a highly experienced and respected mining engineer who had spent his entire career working for Anglo American — joined Lonmin on July 1 after leaving Amplats, where he had been overlooked for the position of CEO.

That went to former Kumba Iron Ore CEO Chris Griffith, who took over Amplats in September last year, replacing former CEO Neville Nicolau.

This was the second time that Magara had been overlooked for a top executive slot at Anglo American.

The first was when he was moved into Amplats in 2009 during a management reshuffle by former Anglo American CEO Cynthia Carroll. Magara became the executive head responsible for engineering and projects at Amplats reporting to Nicolau, after having served as CEO of Anglo Coal SA.

During his career with Anglo American, Magara had introduced a revolutionary safety programme at one of the group’s major collieries.

He was also heavily involved in the creation of Anglo Nyosi Coal — a black empowerment joint venture which holds the contract to supply coal to Eskom’s new Kusile Power Station.

In his position at Amplats Magara was heavily involved in the development of the group’s Unki mine in that country, and the negotiations over the indigenisation requirements of the Zimbabwean government.

He also led the company’s consultations with South Africa’s government and trade unions dealing with the proposed restructuring of Amplats, in which 14 000 jobs may be at risk.

According to a statement from Lonmin, “we believe that by using Lonmin shares, rather than cash, to deliver this buyout of Mr Magara’s Anglo lock-ins, we significantly boost his alignment with shareholders’ interests. He has also agreed to make a personal shareholding with a value of three times his salary within three years of joining, rather than the five years our policy currently targets, to further boost that alignment.”

Magara could not be reached for comment by the time of going to print.

Lonmin shares are trading near the five-year low of R35 set late last year after the wave of unrest on its mines, which culminated in the Marikana shootings.

The shares traded as high as R500 in 2009 and about R200 as recently as the beginning of 2011.

Lonmin, formerly the mining division of Lonrho plc, is a producer of platinum group metals operating in the Bushveld Complex of South Africa.

It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.

Its registered office is in London, and its operational headquarters are in Johannesburg, South Africa.

Lonmin rose to international attention following the Marikana miners’ strike in August, 2012, in which over 100 striking Lonmin employees were shot (36 killed, 78 wounded) by South African Police Service officers. — With Sunday Times

Comments (1)

Keep it up Ben, you really raise the flag of Zimbabwe and you deserve it. A true reflection of how Zimbabwean human capital is excelling worldwide

Farai - 18 July 2013

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