Skip to content skip to secondary navigation

Annual report suite 2012

Abridged remuneration report

In 2012, the group employee turnover level stood at 7.0%, which is a decrease from the 8.6% level reported in 2011.

Employment

AngloGold Ashanti is a significant employer in many of the regions in which we operate. In 2012, the group employed, on average, 65,822 people, 73% of whom were full time employees and 27% contractors. This is a 7% increase in the number of people employed, from 61,242 employees in 2011 and is due primarily to the build-up of projects for example Tropicana in Australia. Further increases of this proportion are not expected for 2013.

Human rights

We seek to be a fair and equitable employer, providing meaningful opportunities to employees, irrespective of origin, gender, race or disability. At all times we uphold the International Labour Organization’s Declaration on the Fundamental Principles and Rights at Work, and abide by country-specific legislation and practice.

OS Our approach to human rights is discussed under Respecting human rights of our Sustainability Report.

We recognise employees’ rights to freedom of association and collective bargaining. At the end of 2012, some 91.5% of our employees were either members of a union or catered for through collective bargaining agreements. Collective bargaining agreements are not the norm in the United States or Australia, although a high level of employee participation in the affairs of the company is encouraged.

Labour relations

Flowing from the unprocedural strikes and related violent conflict which afflicted the sector and country during the year, our South African gold operations experienced a number of unprocedural strikes and some protest action in late 2012. The strikes and protest action at our operations were resolved without serious injury, at a time when many of our peers experienced violence. There was however a significant impact on production.

OS See Responding to the strike in South Africa in our Sustainability Report for further details.

Skills shortages

Global skill shortages persist, particularly in the mining and resources sector and in the countries and regions in which we operate, extensive programmes are in place to attract, develop, retain and engage potential and current employees. Our approach is a holistic one, using the System for People, which forms part of our business improvement programme, Project One.

OS We address this in our Sustainability Report under Attracting, developing and retaining our people.

Diversity

As a global company, AngloGold Ashanti is committed to promoting diversity amongst our workforce. Policies are in place to protect employees from prejudice and in some countries to promote the advancement of certain groups of employees. These include women, disabled employees, indigenous people and historically disadvantaged employees.

While the advancement of women is a focus in all our regions, our Australasian Region has made the best progress in the representation of women, with the percentage of women in the workforce rising from 29% in 2011 to 40% in late 2012. At the end of 2012, women made up 12% of our permanent employees, 18% of our management, 23% of our executive and 8% of our board.

Mining Charter

The South African Mineral and Petroleum Resources Development Act (MPRDA) and the Broad-based Socio- Economic Empowerment Charter for the South Africa Mining Industry (Mining Charter) requires, among other things, that mining companies ensure that 40% of management is made up of historically disadvantaged South Africans (HDSAs) by 2014, and that 10% of employees in mining are women, by 2014. AngloGold Ashanti has plans in place to achieve and exceed these targets, which are specified in our Social and Labour Plans (SLPs), prepared in compliance with the Mining Charter. At the end of 2012, our South African region reported that 46.3% of our management were HDSAs, and 14% of our employees were women.

Employment of locals

We remain committed to providing employment in the countries and regions in which our operations and projects are located and recognise that it is incumbent on us to identify and develop the requisite skills and potential for both our existing operations and those we plan to implement in the future.

The progressive employment of local nationals is referred to as localisation, and is of particular relevance in the Continental Africa Region. This process is aimed at ensuring equitable representation of local national employees at all levels of work at business units and mine sites. Each site in the Continental Africa Region has targets, schedules and resources specifically in respect of processes to develop and promote the internal supply of local skills and is done in accordance with regulations and agreements. Expatriates are employed to satisfy the demand for certain categories of skilled employees should there be a lack of local nationals in these areas. Given the work required on new projects, the number of expatriates in the Continental Africa Region has increased marginally year-on-year.

Remuneration philosophy and policy

AngloGold Ashanti’s Remuneration Policy is designed to allow us to compete in a global market where growth and scarcity of key skills remains an obstacle. The focus is therefore to attract and retain these key skills whilst recognising that cost and shareholder value are fundamental drivers of the policy delivery.

A holistic remuneration approach is followed which includes guaranteed pay (comprising base pay and benefits) and variable pay (which is separated into short-term incentives and longterm incentives). All elements play a key role in attracting and retaining our people. To support this philosophy we therefore:

  • align the behaviours and performance of our senior management and executives with the strategic goals of the organisation, by offering competitive incentive plans with performance goals in place that ensure that their interests are aligned with those of shareholders;
  • benchmark our executive remuneration against a comparator group of global and South African mining and multi-national companies. The comparator group is reviewed annually to ensure that it continues to be appropriate;
  • continue to encourage the development of our employees to meet our business needs;
  • ensure that our employees share in the success of our company; and
  • continue to ensure that the correct governance frameworks are applied to all decisions and practices around remuneration in AngloGold Ashanti.

We endeavour to ensure that both the needs of our employees and those of the shareholders are aligned to deliver the best results in terms of both attracting and retaining the skills required.

FS Details of the AngloGold Ashanti Remuneration Policy can be seen in the Remuneration Report in the Annual Financial Statements.

Remuneration components

Short-term incentive

The short-term incentive, known as the Bonus Share Plan (BSP) is part of the variable element of the total reward package. The BSP is designed to reward the eligible employees for the overall annual performance of the company. It consists of an annual performance-based cash incentive bonus and a matching share award (equity bonus) with deferred vesting. The vesting is over a two-year period, with 40% vesting after 12 months, 60% vesting after 24 months and an additional 20% retention award for remaining in service and holding the shares for a full 36 months. From 2013 the structure will be changed. Details can be seen in the Remuneration report in the Annual Financial Statements 2012.

The calculation of the performance score for the year is based on the individual as well as the company or business performance for the period under assessment. Once the performance is measured it is then allocated to the employees by their job level in the organisation (this determines the target and maximum allocations an individual is able to achieve).

Long-term incentive

All executives and senior managers participate in the long term incentive plan (LTIP). The objective of the LTIP is to align the interests of the company, shareholders and executive management over the medium to long term.

In terms of the LTIP, the manager is granted the right to receive shares in the company, subject firstly to company performance conditions achieved over specific performance periods and secondly to continued employment within the group. The LTIP has a three-year vesting period from the date of grant. The value of the awards that may be granted under the LTIP is based on a percentage of base salary. Refer to the Remuneration Report for further details.

Remuneration of various employee categories

Remuneration as it applies to the board

The approach is to target the non-executive directors’ fees at the median of the South African markets and the lower quartile of the global markets. In order to accomplish this, an annual bespoke survey is conducted for the non-executive directors by GRS/Mercer. In addition, the PwC Non Executive Survey is used from a South African perspective. The Remuneration Committee recommends increases to non-executive director fees, which are then approved at the annual general meeting. Non-executive directors do not participate in any share or incentive schemes.

Remuneration as it applies to executive directors and executive committee members

The remuneration of our executives is benchmarked against a global group of comparators. Each individual executive’s personal role and performance, within the context of a company of the size and complexity of AngloGold Ashanti, is reviewed annually against the benchmark group from a base pay, benefits, guaranteed pay and variable pay perspective. The 2012 bespoke benchmark survey was completed by GRS/ Mercer. For the 2013 annual increases (awarded effective from January 2013) the comparator group has been modified, following shareholder feedback, to a slightly smaller peer group of companies (11) that are closer aligned with AngloGold Ashanti in size and geographic spread.

Each executive’s role is individually sized to ensure the best match possible. The comparison is conducted against the same or similar roles irrespective of place of work (but including a review of purchasing power parity between countries). Given that most organisations do not match by the same internal stratum-based system used in AngloGold Ashanti, we match each of the executive roles based on their individual role descriptions, using the Mercer Survey methodology known as International Position Evaluation (IPE). These roles are then matched directly with the survey participant data individually by doing direct market role comparisons.

The IPE system assists in comparing the data across different company sizes and the data can be analysed to a detailed level. When measuring the company and the job size the IPE methodology takes into consideration, turnover, number of employees, value chain, impact (inclusive of the organisation size), communication, innovation and knowledge.

Once each component of remuneration (base salary, shortterm incentives, long-term incentives and benefits) is analysed and compared with the benchmarks a proposal is made on the fixed and variable components within the frameworks and rules of the schemes that AngloGold Ashanti operates in.

The Remuneration Committee sanctions all increases and incentives for the executives; these are then approved by the board. Executives participate in the BSP and LTIP schemes up to the maximums as indicated in the Remuneration Report.

Remuneration as it applies to managers

Salaries of managers and senior managers are benchmarked primarily against the local markets although for scarce skills and senior management roles with global scope, the global market comparisons are used. Our salary benchmarks are generally targeted at the market median, but where there is a shortage of specialist and/or key technical skills salaries higher than the benchmark median may be paid, targeting up to the 75th percentile.

Managers participate in the BSP and senior managers participate in the BSP and LTIP. In some instances, management level staff, on mines, participate in production bonuses (typically paid quarterly). Where these bonuses are paid to management level employees, these managers will receive the matching allocation of BSP shares.

AngloGold Ashanti’s remuneration to employees consists of guaranteed and at-risk elements as illustrated below:

Pay elements on offer Goals and outcomes Guaranteed vs at-risk pay
Base pay For the attraction and retention of key employees
Performance based pay and internal equity
Aligned to appropriate benchmarks (local and global) and pitched at the 50th percentile of market
Guaranteed pay
Benefits Aligned to global and local benchmarks (internal and external)
Legislatively compliant
Enhance our employee value proposition
Guaranteed pay
Short-term
incentives
Company performance (both financial and non-financial e.g. safety)
Business unit performance (e.g. production)
Individual performance
At-risk pay
Long-term
incentives
Aligning company, individual and shareholder goals
Measured against company performance
Retention
At-risk pay

Remuneration as it applies to all employees (non-managerial)

Salaries for employees (non-managerial) are benchmarked against the local markets. Our salary benchmarks are targeted at the market median; where there is a shortage of specialist and/or key technical skills, payment is higher than the benchmark median, targeting up to the 75th percentile.

Employees falling within the bargaining unit receive the salary increase negotiated with employee representatives/trade unions or multi-employer agreements. The remainder of our staff receive increases in line with the market and prevailing CPI for the respective country that they reside in.

Short-term incentives are linked to production at local sites. The non-managerial employees at corporate office are awarded cash bonuses in line with the BSP short term incentive cash bonus scheme but no matching shares are awarded.

Performance and remuneration

The board approves the annual performance targets for the company. The Remuneration Committee in turn approves the cascaded performance targets related directly to the short and long-term incentive schemes.

Individual performance

Performance management is a sub-system of the System for People and is a managerial accountability. Although each employee is accountable for his/her own personal effectiveness in the role, managers need to ensure that their subordinates are clear about the accountabilities on which they will be assessed and that they receive the necessary feedback and coaching to enable them to maximise their effectiveness in the role. Employees must also be recognised and rewarded for their contributions to company success.

The annual reviewing of individual performance against agreed performance objectives and the setting of new objectives for the next review period must be completed for each employee by his/her manager. Planned general accountabilities cross functional working relationships and task assignments all need to be reviewed; recorded into role descriptions; signed off by employees; and submitted to Human Resources.

There are informal and on-going performance assessments of an employee by his/her manager. Managers are required to continuously appraise subordinates in terms of their approach to work, while providing feedback, also within an on-going working dialogue, to both improve performance in the role and ensure goal alignment.

Where applicable, coaching takes place in order to provide subordinates with guidance to improve their performance in-role.

In terms of the formal annual review process managers are required to evaluate the overall personal effectiveness of subordinates for the period of review. It is during this process that performance is equilibrated by the manager-onceremoved; and appropriately recognised and rewarded.

Remuneration of mobile skills

Being a global organisation with a requirement for specialist skills AngloGold Ashanti utilises a skilled workforce with members who are globally mobile to service the organisation primarily in remote locations or areas where the skill set is not available locally. The mobile workforce is tasked to develop and grow skills locally (localisation).

The mobile workforce is given expatriate benefits including housing, schooling, international medical aid, international pension funds (where appropriate) and home leave trips in line with the nature of the assignment that they are on, the duration and the location where they are based.

Employee share Ownership Plan

On the 12 December 2006, AngloGold Ashanti announced the finalisation of the Bokamoso Employee Share Ownership Plan (Bokamoso ESOP) with the National Union of Mineworkers (NUM), Solidarity and United Association of South Africa (UASA). The Bokamoso ESOP creates an opportunity for AngloGold Ashanti Limited and the unions to ensure a closer alignment of the interest between South African based employees and the company, and the seeking of shared growth solutions to build partnerships in areas of shared interest.

Participation is restricted to those employees not eligible for participation in any other South African share incentive plan. Between the December 2006 launch date and December 2012, a total of R394.67m flowed to members of the Bokamoso ESOP. Of this, R21.84m was paid in dividends, R316.55m as a consequence of the vesting of free and loan shares, and R56.28m due to the proceeds of a rights issue in 2009.