Anglo American boss Carroll faces shareholder wrath

Several major shareholders in mining firm Anglo American have written to the company chairman calling for a new chief executive.

by Michael Northcott
Last Updated: 19 Aug 2013

The current boss of the London-based diamond-mining firm, Cynthia Carroll, has found herself under concerted attack this morning from shareholders who are angry about the company’s most recent financial results, published two weeks ago. According to the Telegraph, they described the latest figures as a ‘coup de grace’ in a letter to chairman John Parker, and voiced concerns that the company could be at risk of an takeover because of its weak position.

Investors’ antics got a tad nastier today, after they had their initial complaints rejected the by Parker: they have now gone over his head to the firm’s senior independent director, David Challen, calling for Parker to be overruled.

And the cause of all this aggro? Its most recent half-year figures in which Anglo American posted profits of £3.7bn, down 38% from £6bn in the same period in 2011. This was on revenues down 10% from £18.3bn to £16.4bn, and has rattled shareholders’ cages amid turbulent global commodity markets and the growing threat of rival Glencore after its IPO earlier this year. Shares in the company are around 20% lower than they were when Carroll took the top job back in 2007, and 45% below the top price they reached back in May 2008.

Obviously a lot of the company’s woes can be put down to recession – decreased demand for commodities in recession-hit countries all over the world makes it difficult to keep profits rising. Add to that, there have been legal challenges to several of its projects in South America, and reduced demand for platinum from a depressed car industry has hit the miner’s bottom line hard. But investors will not be interested in excuses when the value of their stock is at stake. The company is undervalued, and faces even graver threats from the Xstrata/Glencore merger which could take place within the next year.

There have been calls from several corners in recent months for Carroll to resign, but this is the first time a co-ordinated attack on her position has been presented to senior management. Losing her job at Anglo American would be a stinger: last year she earned £2.17m in a package consisting of £1.17m basic pay and nearly £1m in her annual performance bonus.

How she'll get on this time depends on how the chairman and other shareholders respond to this letter. She'll certainly need all the advanced mining equipment at her disposal to get out of the hole...

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