Originally Posted by Dave A
....If top management worked for free, the rest of the staff could all get a 1.57% pay increase at no cost to the company. For those paid R12 000.00 per month, that translates to an increase of R188.40 each
That's R188.40 before tax, they wouldn't take that much home I'm afraid.
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Has anyone more information on the background of this Patrick Craven?
Me-thinks this trouble-maker deserves closer inspection.
In search of South African Technology Nuggets(R), for sale & trading in South East Asia.
I'm not picking on Patrick Craven per se. I merely point to what he says because he is pretty representative of a particular outdated mindset (that unfortunately is very prevalent in the worker union environment).
I've always been impressed by Solidarity which seems to have a much better grip than most on the employer / employee codependancy relationship. And to be honest, I'm starting to get impressed with NUM of late too. There are clear signs that they're well aware that you can push too far and kill the goose that lays the golden egg.
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All I am simply saying is that there must be some fairness, the fact is without the CEO the company can still mine, but without the team of miners they have ground to a halt. And I think investors should question the CEO as to why the strike was not prevented, when prevention could of avoided such huge loses.
The captain of the ship has to take responsibility for any mutany on his ship, he simply can not say, it is because of the ignorant people at the bottom not understanding the importance of transporting the load. When unions first started companies then introduced Human Resource management(Spies) to find and quell any ill feelings spreading amongst its labour. We have to see both sides of the story to balance the equation.
The riddle for the hypothetical scenario
It is costing you 8R to dig the dirt
In Rands
Income 10
Expenses
Salaries 2(2 Managers)
5R Wages 5(25 diggers @20cents each)
2R Expenses 1
Net profit 2
You stop digging for 3months
Income 0
Less Expenses
Salaries R2
General Expense R0.5
Net Loss 2.5
Net Loss for 3 months 7.5
In 5 months you cover losses.
You increase wages and resume mining
In Rands
Income 10
Expenses
Salaries 2(2 Managers)
5R Wages 5.06(23 diggers @22cents each(2miners killed in strike)
2R Expenses 1
Net profit 1.4
Scenario 2
You decrease Managers Salarie
In Rands
Income 10
Expenses
Salaries 1(2 Managers)
5R Wages 5.06(23 diggers @22cents each(2miners killed in strike)
2R Expenses 1
Net profit 2.4
Of course these are just figures and we can play with them in anyway to tell the side of the story we want to justify. But the fact remains if the workers strike you run into losses, if the one manager strikes in the short term you increase your profit. We can further the debate and say said company is already running at a loss and it will take them a longer time to recover and is losing investors. And R180 rand maybe nothing for some, but I know my maid and gardener will be more then grateful if I gave them an extra R180 a month, I understand the situation is more complex when the unions start controlling the herd and asking for unreasonable increases, or when the unions are actually the spark of the strike. But I guess just like how Patrick Craven Turns a blind eye to the losses a company makes during a strike, Companies are guilty too of turning a blind on that most important company asset the human machine.
I'm confused. Is the leader important or not?
For how long?
Only because the company is prevented from taking up a very obvious solution.
Dare I say it? May as well...
replace them with cheaper labour that is more than willing to work for the pay on offer.
To compare apples for apples - if 2000 workers are absent for one day, then our CEO has to be absent for 2000 days. And to keep this excercise pure let's be clear, you're not allowed to replace the CEO - whatever he/she normally does simply is not done.
Which is going to hurt everyone more?
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Chrisjan B (02-Nov-12)
Very Important, but at times we have to know wether said leader is best for company or not. Freeze the wages of the bottom give leader extra large bonus. If we can blame Presidents for state of country, why not CEO for state of mine. If a president argues that his failure as president is down to his subjects would you accept that?
not a bad idea, a good CEO should remove the bad apples before they spoil the barrel
I think more an ecomonies of scale issue in the short run companies suffers without 2000 workers but not without CEO, but in the long run company will suffer without CEO. dare I say it? May as well replace incompetent(company is making a loss) over paid management and with cheaper staff who are willing to do the job.To compare apples for apples - if 2000 workers are absent for one day, then our CEO has to be absent for 2000 days. And to keep this excercise pure let's be clear, you're not allowed to replace the CEO - whatever he/she normally does simply is not done.
Which is going to hurt everyone more?
The fact is I agree with what you saying, I agree with the fact that unions dont understand the nature of business. All I am saying is there should be some fair play and some of the responsibility for strike has to fall in the companies hands.
Last edited by Dave A; 02-Nov-12 at 01:29 PM. Reason: fixed formatting tag
Dave A (02-Nov-12)
Fair comment
EDIT: At least as long as your cheaper top management are able to turn the company back into profitability. You might actually have to spend more money to get the right person who is actually able to do the job.
Think about it - When you're losing 200 million and your top management is costing you 10 million, the actual cost of top management is a very small part of the company's loss problem.
I agree top management's remuneration needs to be fair. The tricky part is defining what fair and unfair might be exactly.
I also agree this is a good example of an unreasonable practice:
But that's definitely not applicable in the Lonmin case.
Last edited by Dave A; 02-Nov-12 at 03:12 PM. Reason: extra thought
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vieome (02-Nov-12)
I agree with vieome that CEO's earn far too much. There is the perception that we have to compete with what they could earn abroad. Well, the reality is that they do not live abroad. They live in South Africa where they pay just the same as all of us. Be realistic. It is not as if these jobs are available to pick and choose.
A CEO for a public company is a paid employee. The agency factor applies. It is not his business, so he can abandon ship as soon as the s#!t hits the fan. An entrepreneur puts his balls on the block. He/she will bite the bullet and will risk everything to save the company. The entrepreneur is entitled to be rewarded for risk and effort and earn more. The CEO is just a paid employee and should be rewarded for output, not input. NO CEO is worth R50 -R60 million p.a. They should not earn more than say R3m R4m p.a. (only if it is a really big company) and then earn HUGE bonuses as a % of profit as an incentive, but that kind of incentive should go down to staff level as well.
Too often the remuneration committees of big companies are loaded with directors who also sit on boards of other companies. They vote for massive increases for their pals who will do the same for them. You scratch my back, I scratch yours...
This den of thieves attitude has filtered through to government owned institutions such as Eskom, Telkom, SAA and also government departments where everyone has an excuse to plunder the treasury.
Excellence is not a skill; its an attitude...
Bit old, but I got this via e-mail today.
Posted on September 5, 2012 by Arthur Mackay
Amidst all the confusion after the shooting of 44 protesting miners at Lonmin’s Marikana platinum mine in South Africa, we should not lose sight of the astonishingly simple underlying issues.
We are told the workers are demanding that their wage be raised to R12,500 per month (about $1,500) but the workers claim their salary is already at this level. They say they are sub-contracted by a company owned by billionaire South African oligarch Cyril Ramaphosa. He only pays them R5,400 or less and pockets the rest paid out by Lonmin.
If this is so then agreeing to the workers’ demands would cost Lonmin nothing and the whole dispute is between the workers and Cyril Ramaphosa. Instead of saying this however, Lonmin has placed itself between the two and taken responsibility for negotiating a pay rise which no one has asked for. Doing this, Lonmin is placing Cyril Ramaphosa’s private interests above those of its common stockholders and is neglecting its fiduciary duties. It is also leaving itself open to litigation.
Cyril Ramaphosa in fact owns 9% of Lonmin but was paid out $304m in cash by the company in 2010 in a deal backed ultimately by Xstrata. By comparison common shareholders have received only $60m in dividends in the last two years and have incurred over $2.5bn of paper losses. What the workers are requesting is that Ramaphosa share with them about $18m which he is taking from their wages.
When Cyril Ramaphosa bought 50.03% of Lonmin’s Black Economic Empowerment partner Incwala Resources in 2010, Lonmin put up the $304m in cash which he needed. Lonmin funded this with a share issue to which, according to Lonmin, Xstrata was the key subscriber. Since then a further $51m of credit has been extended to Ramaphosa.
Ramaphosa’s company also provides all of Lonmin’s welfare and training services and for this he may have been paid at least $50m in 2011 alone. Based on the worker’s demands and their living conditions, we can guess at how much of this reached its stated purpose. Companies linked to Ramaphosa were also paid “advance dividends” by Lonmin of $20m in the last two years.
All-in Lonmin seems to have paid Ramaphosa and his related companies well over $400m since he bought into the company. This is about 25% of Lonmin’s current market value and is a very large amount for a man who was supposed to be doing the paying when he bought his stake.
And this is not all.
The Marikana conflict is portrayed as a dispute between two unions, the hegemonic NUM and a small new union, the AMCU. But the NUM has been Cyril Ramaphosa’s vehicle since he founded it in 1982. He was its Secretary General until 1998, the year he went into private business to become a billionaire. This has led to claims that the ANC has instituted a form of modern day slave labour. The workers’ employer and their union are effectively the same person. Is it surprising that the workers worry that their union is not wholeheartedly defending their legal rights?
All this casts the Marikana conflict in a very different light to what we have heard so far.
The dirt-poor Marikana workers, many from Lesotho, living in slums, wearing rags, are asking for an extra $750 per month from one of the most powerful figures in the ANC and one of the richest men in the world, and they are openly calling him an exploiter.
Such a debacle, which calls into question not only Lonmin, Xstrata and Ramaphosa but also the whole ANC hierarchy, the reality of the “New South Africa” and the credibility of the ANC’s many foreign supporters, not least those in the United States, helps to explain the speed and the savage brutality of the reaction.
On 16th August, 6 days into the strike, the police opened fire injuring 112 and killing 34.
Local witnesses claim the workers were not charging at the police but were fleeing from them as tear gas was thrown at them by another police detachment. Autopsy reports apparently confirm many were shot in the back.
At the time Jacob Zuma, President of South Africa, was in Mozambique at an SADC meeting. He returned to South Africa but only one day later. He visited Marikana briefly but stayed away from the main area. A full five days passed and only then did he return and visit the crime scene. On the day of the attack Ian Farmer, the CEO of Lonmin, was diagnosed with a “serious illness” and still has not returned to work.
A few days later the 270 men who were arrested were charged with committing murder. They allege that they were stripped in their cells and beaten with sticks. Once an international outcry began and it became apparent that the publicity of a trial could be counterproductive, they were quickly released.
Even with the above illumination, some crucial questions still remain.
How could Cyril Ramaphosa exercise such influence over Lonmin’s Executive Board to be able to effectively bend it, and potentially the Board of Xstrata too, to do his bidding? And what truth could the South African government have been so desperate to hide that it was judged better to risk everything and open fire on its own people, rather than let it see the light?
The answer lies at the heart of the bitter fallacy of the South African commodities boom and the emerging markets paradigm which we have lived in the last 15 years. The sad truth is that nothing has changed, or, more accurately, nothing has improved.
In the past there was one oligarch, Harry Oppenheimer, who controlled Anglo American. Mr Oppenheimer officially opposed the apartheid regime and was a liberal but conveniently continued to export gold and diamonds from South Africa up to and beyond 1994.
Today there are five to ten oligarchs. They are black and they are African. They too oppose apartheid and they too are exporting all of South Africa’s gold and diamonds at the present time. The reason Cyril Ramaphosa could ransack Lonmin in the way he has is because he effectively is Lonmin. Lonmin exists in many ways to serve his interests and its foreign shareholders would do well to understand this. The whole debate about nationalisation is therefore completely moot. South Africa’s mines have already been nationalised and given over to a ruthless tyranny, signed, sealed and delivered by the many cheerleaders of the ANC overseas.
So what will happen next? In fact the next Marikana has already occurred. Tear gas was fired and four workers were shot two days ago on a gold property near Johannesburg controlled by another oligarch, Tokyo Sexwale. The strategy of the ANC’s opposition, which is correct given the extent of the disenfranchisement since 1994, will be to now target every oligarch. It will be demanded that they return much of what was taken. But this will never be done voluntarily and so this conflict, just like the apartheid struggle, will go on for many years.
Will this really be the lasting legacy of the post-apartheid era? Is this what Nelson Mandela’s years in prison, Bill and Hillary Clinton’s ringing endorsements, Bob Geldof’s concerts and Bono’s songs were meant to bring to us? Will they all now leave the world in darkness, with a set of fearful problems for a future generation to sort out? We will have to hope for the best but prepare for the worst.
– Arthur Mackay is an analyst of global economic and political issues.
~Expenses will eat you alive! - My first Boss~
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