Kumba R500 000 worker payout approved

Shareholders pass SA’s most generous mining share participation offering

THABAZIMBI – Kumba Iron Ore (JSE:KIO) announced on Wednesday 2 November that its shareholders had approved the general terms and conditions necessary to implement phase one of its broad based employee share participation scheme known as Envision.

The offering is seen as the most generous in the history of SA mining with employees from the lowest skill levels expecting to take home what may amount to R500 000 for five years of service.

This is in addition to the basic salaries earned by employees and an average of R55 000 in dividends thus far paid out by the scheme to individual participants.

Employees will be paid out the capital appreciation linked to Envision’s 3% holding of Sishen Iron Ore Company (SIOC), Kumba’s major subsidiary, accumulated over the five years since the scheme was implemented according to company secretary, Vusani Malie.

The actual value of the payout will be calculated based on the five day volume weighted average price of Kumba’s shares up to November 17, said Malie, with the final payout being made on December 15.

All employees below managerial level will stand to benefit an equal amount on a pro-rata basis calculated according to the total period over which they had been employed during the life of the first phase of the scheme.

The scheme will pay out a total R2.5bn or R500 000 for an employee who has been employed by Sishen for the full five year period said Malie.

More than 5 800 employees stand to benefit from the scheme.

“You can imagine the excitement all round… our employees are ecstatic about this,” said Malie, “it is a scheme that is potentially life changing”.

In addition to the Envision scheme Kumba operates two other empowerment initiatives.

One of these is the SIOC community development trust which also holds a 3% stake in SIOC.

According to Malie, the trust had paid off the loan granted to it in order to secure its stake in the company and now benefits from an unencumbered dividend payout approaching half a billion rand annually for investment into community development initiatives.

“The Kumba scheme is basically one of the best we have in the mining industry,” said National Union of Mineworkers (NUM) spokesperson, Lesiba Seshoka.

“I have not as yet come across or encountered anything similar to the scheme, it’s actually in a class of its own … our members find it far better than any other scheme”.

The scheme will see workers take home far more than they would through a provident fund accumulated over a 20 year career as a mineworker, said Seshoka.

“It is a benchmark and we see it as something that many companies should emulate … we hope to push all mining companies to do something like that”.

“Unfortunately people are bogged down with useless stuff … the mining industry is generally playing games,” when it comes to employee share incentive offerings.

Such schemes include Palabora Mining Company’s (JSE:PAM) (PMC) proposed schemes which “are just a disappointment”.

According to Seshoka, PMC’s scheme will “at the end of the day not see its employees receive anything from it … it will keep employees indebted forever”.

– Moneyweb