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In April 2016 the shareholders of BP voted against a pay package of US$20m for the company's chief executive officer (CEO) Bob Dudley. The vote was non-binding to BP but it clearly sent a message to the management. Subsequently, the chairman Carl-Henric Svanberg acknowledged the mood amongst the company's investors and stated in his speech at the annual general meeting that, "We hear you. We will sit down with our largest shareholders to make sure we understand their concerns and return to seek your support for a renewed policy."

The link to the cement industry here is that many of the world's major cement producers are public companies. Similar to BP they internally set CEO and leading executive pay and remuneration packages. Just like BP, cement companies too could run into similar complaints from their shareholders, for example, should the construction and cement markets have similar jolts that the oil industry has faced since mid-2014.

To be clear: this article is not attempting to pass judgement on how much these CEOs are being compensated. It is merely seeing how compensation compares amongst a selection of leading cement companies. LafargeHolcim's revenue in 2015 was greater than the gross domestic product of over 90 countries. Running companies of this size is a demanding job. What is interesting here is how it compares and what happens when it is perceived to have grown too high, as in the case of BP.

It should also be noted that this is an extremely rough comparison of the way CEO pay and wage bills for large companies are presented. For example, the CEO total salary includes incentives, shares and pension payments. The staff wage bills includes pension payments, social charges and suchlike.

Graph 1: Comparison of CEO total remuneration from selected cement companies in 2015. Source: Company annual reports. 

There isn't a great deal to comment here except that compared to the average wage these are high from a rank-and-file worker perspective! The total salary for Eric Olsen, the CEO of LafargeHolcim, is lower than HeidelbergCement and Italcementi, which seems odd given that LafargeHolcim is the bigger company. However, Olsen has only been in-post since mid-2015. By contrast, Bernd Scheifele became the chairman of the managing board of HeidelbergCement in 2005. Carlo Pesenti, CEO of Italcementi and part of the controlling family, took over in 2004. Albert Manifold, CEO of CRH, also sticks out with a relatively (!) low salary given the high revenue of the company.

Graph 2: Comparison of CEO remuneration to average staff cost and total company revenue in 2015. Source: Company annual reports. 

This starts to become more interesting. HeidelbergCement's higher CEO/staff and CEO/revenue ratios might be explained by Scheifele's longer tenure. Yet Italcementi definitely sticks out with a much higher CEO wage compared to both the average staff wage and the company's revenue. Again, CRH stands out with a much lower CEO/staff ratio. Dangote's CEO/staff ratio is low but its CEO/revenue ratio is in line with the other companies' figures.

Consider the figures for China Resources and this suggests that CEO/revenue ratio may be more important than the CEO/staff ratio. The implication being that the market will only tolerate a ratio of up to about 0.05%. Any higher and the CEO's family has to own the company. Which, of course, is the case with Carlo Pesenti and Italcementi. Until HeidelbergCement takes over later in 2016 that is.

That’s as far as this rough little study of CEO remuneration at cement companies will go. So, next time anybody reading this article from a cement company asks for a pay rise, consider how much your CEO is receiving.

Kenya: Central Bank of Kenya (CBK) deputy governor Sheila M’Mbijiwe is seeking re-election to the board of LafargeHolcim majority-owned Bamburi Cement. A notice sent to shareholders stated that the CBK senior executive will be seeking a new mandate when the company holds its 65th annual general meeting on 2 June 2016 in Mombasa. The 58-year-old senior CBK executive, who also sits on the regulator’s Monetary Policy Committee, was set to retire by rotation but is seeking to retain the seat.

Others seeking re-election are Daniel Patterson and D Drouet who are also retiring by rotation but are eligible to seek to be elected again.