New Perenti chair Diane Smith-Gander says executive pay changes coming after mine fatalities

Perenti’s management have been put on notice that their pay structures will be further tightened to make them more accountable for workplace safety after five deaths inside two years. The underground mining and drilling contractor’s new chair Diane Smith-Gander says Perenti’s board is mulling “in-flight” changes to executive remuneration after concerns among investors and proxy holders about the poor safety record triggered a first strike against its remuneration report at last year’s annual meeting. “It would be a very foolish board that doesn’t listen to that feedback,” Ms Smith-Gander said in her first interview since taking Perenti’s helm last month. “I can’t tell you where we are headed ... (but) there will be changes.” Ms Smith-Gander stepped up when Rob Cole, Perenti’s chair of less than three years, resigned suddenly in mid-March, ostensibly to take up a board seat with Sydney-based waste management group Cleanaway. The change came just two weeks after the death of a worker at the Mana gold mine in Burkina Faso — Perenti’s fifth workplace fatality since May 2022 — put the company’s safety record under renewed scrutiny. Although management bonuses were cut back as a result of two deaths at the Dugald River base metals mine in Queensland in February 2023, the Perenti board were criticised for not going far enough. Ms Smith-Gander noted the “really unacceptable track record” but said Perenti had already made “radical” changes before the latest fatality, while working to “engineer out” hazards with the use of technology to minimise the inherent risks in underground mining. The “top-down” changes had included upgrading the board’s safety and sustainability committee, now headed by former coal mine boss Andrea Sutton, an organisational restructure in the wake of last year’s acquisition of drilling group DDH1 that sees new eyes overseeing operations, a review of leadership development programs and giving its 9000 employees increased confidence to report unsafe working practices. “It will always come down to onsite leadership and what happens when we get boots on the ground,” Ms Smith-Gander said. She said Perenti was wary about making “knee-jerk” changes to the management at sites where safety is being questioned, pointing to alternative strategies such as putting managers under extra supervision, changing the reporting chain or adding adjacent roles. “We use that full gamut but there are certainly people who have left the business because they have not been able to meet our expectations around how they operate,” she said. Investors, however, want to know how the board will change the remuneration frameworks for its executives to ensure they suffer deeper cuts to bonuses for safety lapses. Currently, short-term executive bonuses at Perenti are weighted 20 per cent to safety. One school of thought suggests that company bosses on million-dollar salaries should receive no bonuses whatsoever if workers die on their watch. Perenti’s pay revamp is unlikely to go that far, but Ms Smith-Gander said the group “will be changing the (remuneration) framework so that there would be much lower outcomes” in the event of further fatalities or accidents. She is yet to speak officially with major investors and proxy advisers on the likely changes, but said some had already provided her “full and frank” feedback on the sidelines of a governance summit in Melbourne last month. “I think their headline is, we are expecting big change. And there had already been big change, and unfortunately we then had another fatality.” Ms Smith-Gander suggested that underground mining safety - some 60 per cent of Perenti’s mining workforce work below the surface - is not just an issue for Perenti but for global decarbonisation and the broader mining industry, as deposits of sought-after critical minerals are increasingly being found at deeper depths. “We need to solve (safety) for the sustainability and performance of the Perenti, but we also need to solve it for the sustainability of the industry,” she said. Ms Smith-Gander joined the Perenti board after the $400 million takeover of DDH1, which she had chaired since before its float in 2021. She draws parallels between Perenti and Broadspectrum, the former listed maintenance contractor she chaired for six years until late-2016. “It worked in a lot of hazardous environments, a lot of low margin environments, so that experience stands me in good stead.”