They deserve every penny they receive: the case of Glencore and Tony Hayward

Spare a thought for that poor fellow, Tony Hayward.

I use the word “poor” in the moral sense, of course, rather than the financial. He’s reported to have made about £2.3 million in 2013, and rather more last year, so I don’t think he’s likely to fall victim any time soon to, say, any cuts in benefits support the UK government will be pushing through in the next few months.

However, £2.3 million is terrible cut from his maximum remuneration, o £3.2 million back in 2009, his last full year as Chief Executive of BP.

Ah, yes, it’s all falling into place now, isn’t it? You remember. Hayward was the man who revealed his diplomatic skills when, a few weeks after the Deepwater Horizon oil spill in the Gulf of Mexico, he announced to the press that “I would like my life back.” Since he was at the head of the company ultimately responsible for the drilling rig which caused the disaster, that was a sentiment that was received with less enthusiasm than he might have been hoping for.

It was like the acclaim that greeted Jeb Bush recently when he commented on the latest school shooting in the US, that left nine dead, that “stuff happens.”

The awkwardness at Deepwater Horizon
It caused some discomfort to that unfortunate Mr Hayward

Hayward quite soon got his life back, when BP decided that it might be better all round, taking everything into account and weighing one thing against another, if their ways parted.

He then faced all the problems that those of us who lose our jobs know and dread. He was forced eventually to settle for a much less well-paid job. You can no doubt imagine the feeling of despair: going from £3.2 million to £2.3 million represents a drastic pay cut, not far off 30%. It must have felt like virtual pauperisation.

In fact, things were so bad that poor Mr Hayward, like so many inhabitants of US trailer parks, say, was forced to take not just one job, but two. As well as the interim chairmanship of Glencore, he also took charge of energy company Genel. He had a number of other charitable appointments around the City of London to make sure he could keep the wolf from the door, but you can no doubt picture the stress he had to undergo, with all those jobs.

Fortunately, Genel was able to increase its remuneration package to him last year, by 41.5%, taking him to £2.5 million. And since he’s moved from interim chair of Glencore to take the post definitively, his salary went up to £685,000. With other payments – bonuses, etc. – there’s every chance that he’ll have moved beyond where he was with BP.

All this goes to prove that you can’t keep a good man down. You deliver the goods, and you’ll be paid a reasonable, proportionate return.

For instance, the generous increase in Hayward’s salary from Genel came in a year in which he presided over the company making a loss of £213 million.

Meanwhile, and this is why I’m talking about this at all, Glencore is back in the news these days. It’s the world’s tenth largest company, but what’s most important about it is that it’s massively dependent on the trade in metals – it controls 60% of the world's trade in zinc, apparently, and 50% of the world’s trade in copper. So it’s a barometer of the problems building up for the world right now. The economies, notably China’s, on which we’ve all been relying on for growth in recent years, are slowing; they want less metal; the prices fall; Glencore’s taking a hit. 

On a single day at the end of September, Glencore shares collapsed so badly that Chief Executive Ivan Glasenberg lost $500 million of his personal fortune. That left him in relative penury, with just $1.4 billion, down from $7.3 billion in July 2014. It seems Glencore has recovered most of its most recent share price fall, but taking a longer view, shares that were trading at £5 in 2011 are now down to £1.

At least Hayward managed a small increase in salary last year despite these problems.

Aditya Chakrabortty has given us a fine piece in The Guardian, predicting the difficulties George Osborne will face in 2017, as UK Chancellor of the Exchequer, in accounting for the economic crash that’s coming. Where copper goes, he points out, the world follows, and copper’s on the way down. So Glencore’s troubles are a warning of global troubles to come.

Isn’t it sad that Mr Hayward seems again to have got himself involved in a company that’s facing a degree of unpleasantness? Why, he may be called on to dazzle us once more with his fabled communication skills, perhaps a little honed since Deepwater Horizon. This time, the disaster he fails to avert will be far more far-reaching, affecting the globe and not just the Gulf of Mexico.

In any case, we must surely be left with a sense of the general rightness of things, in a world where top executives of the companies that determine our destinies, deserve and receive the remuneration their skills command.