Sibanye CEO Neal Froneman explains R300-million remuner…

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Neal Froneman, the CEO of diversified metals producer Sibanye-Stillwater,  wants to clear the air on the R300-million elephant in the room — in his typically blunt manner. 

That elephant would be his R300-million remuneration package for the previous financial year, an amount that has striking unions at the group’s gold mines seeing red and has triggered a lot of buzz among South Africa’s chattering classes. 

Froneman says it’s not, in fact, his salary and that the process and incentives behind the figure are “not well understood”. Among other things, it is not a cost to the company. 

“It’s a topic that is not well understood. I hear unions and others referring to it as my salary; it’s not my salary,” Froneman told Business Maverick in an interview on 12 May at the end of the Mining Indaba in Cape Town. 

“My salary is only a very small portion of that and, in fact, it was something like R28-million. That’s a cash portion. But the bigger part is a long-term incentive and it’s not a cost to the company. These are shares, this is a cost to shareholders. This is something that shareholders have approved over a number of years,” he said.

Froneman noted the recent performance of the company, which began life almost a decade ago as a Gold Fields spin-off, mining the latter’s labour-intensive, deep-level gold mines. The company has since diversified into platinum group metals (PGMs) and battery metals.

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Record performance

The wisdom of that strategy has been underlined by two consecutive years of record earnings performances as PGM prices, notably for rhodium and palladium, scaled historic highs. Headline earnings for 2021 rose 27% to R36.9-billion from R29.1-billion in 2020, when the previous record was set. Revenue surged 35% to a record of more than R170-billion, driven by a 20% increase in the group’s PGM production from South Africa. 

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“We, as an executive, because we believe we are good at what we do, have opted to take a smaller guaranteed portion to our salaries for more exposure to the long-term incentive side. And we have punched above our weight and shot the lights out. Now I don’t say that lightly and I don’t say that about myself. We’re a team,” Froneman said.

“The other thing we hear is that we got lucky. We didn’t get lucky. When we entered the PGM markets, people said, ‘Are you crazy? How can you buy Lonmin?’,” Froneman added, referring to the company’s acquisition of Lonmin in 2019. “We did it based on our assessment of what the commodity prices would do and so this is not getting lucky.”

Froneman also threw down a challenge to union leaders: “One thing that would be very interesting is to ask the union bosses to be as transparent with their remuneration as we are — that would be bloody interesting because I hear horror stories at certain unions,” he said.


To say Froneman has irritated unions would be an understatement. One allegation is that Sibanye buys assets only to close them down. But Froneman said Sibanye has, in fact, saved jobs and created value for all of its shareholders.

“Our gold assets were meant to be dead a long time ago. We have not only generated value, but we have saved 30,000 jobs. Lonmin was going to hit the wall [but] the Lonmin asset is now paying for itself every four or five months.”

He also said Stillwater, the PGM operation in Montana that the group acquired, “has paid for itself and still has 30 years of life. Our market cap when we started was R15-billion; it’s now R150-billion. So is this [his remuneration] unfair? Well, I can tell you that we have created huge value for our shareholders. And all we can do is be transparent about it. Some years we get very small long-term incentive payouts.”

On the vexed topic of inequality, Froneman said executive pay was the wrong target. “If we think we are going to reduce inequality by reducing executive remuneration, then we are all making a very big mistake. We actually have to reduce inequality by lifting up the bottom end of the business. And we can only do that by being prosperous.”


This is a subject of much legitimate debate and there will certainly be critics on that front as Froneman stares down the Association of Mineworkers and Construction Unions (Amcu) and the National Union of Mineworkers (NUM), which have set aside their rivalry to join forces in a strike at Sibanye’s South African gold operations that began on 9 March.

On the main point of contention — basic pay — the two sides are not that far apart. The demand is a hike of R1,000 a month, while the offer is R850 a month each year over the course of three years.

The two sides met last week and Froneman said “it was probably the first constructive meeting where there were engagements you could do something with”. Another meeting is scheduled for this week and he said, “Let’s see.” 

But he did warn that if the company cedes to the union demands, the assets would need to be “right-sized” to remain viable — which means layoffs would be in the offing. 

“If we have to capitulate to these demands, the very first thing that will happen is that the assets will have to be right sized through a 189 and that is not in the interest of this country,” he said. The “189” Froneman was referring to is the labour regulation under which companies initiate the process of retrenchments. 

“The cost structure would then not be supported by the business. These are marginal assets, that’s why we’re holding out,” he said. 

He also said there was no danger of closing the mines simply because of the strike. “There is no danger of a mine closing just because we are having a strike. And this perception that we are losing billions of rands is incorrect. There are strike costs by keeping power and pumping water, but that is very manageable.”

Union anger

Wage talks are also looming in the platinum sector and Amcu has already thrown down the gauntlet with a demand for pay hikes of up to 40%.

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Froneman said that miners’ wages “have effectively doubled” in the decade since the Marikana Massacre, an event that threw this issue into sharp relief. Entry-level wages between gold and PGMs roughly vary in the range of about R10,000 and R14,500 a month. 

“If you look at where a mining worker’s entry-level wage sits, he or she earns as much as a dentist engaged in the public service and more than a teacher… So, the bottom line is, for the work, the level of skill, it is a very fair wage,” Froneman said. 

Unions will no doubt beg to differ while many of their members are being squeezed by the burden of providing for growing numbers of dependants against the backdrop of rising unemployment and a sour economy.  

The stage is being set for a rocky round of wage talks at Sibanye’s PGM operations. And, although the R300-million elephant may be the product of wider value creation, it remains a massive target for union anger. DM/BM