Integrated
Annual Report
2018
2018
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Our workforce is structured to support the delivery of immediate and long-term strategic objectives. During 2018, the two most significant people-related developments were the restructuring exercise and related strike action at South Deep, as well as the transition from owner to contractor mining at Tarkwa. The key people-related balanced scorecard objectives were driving diversity and inclusion, managing the talent pipeline and ensuring succession planning for critical roles, and strengthening a values-based culture that drives delivery.
Due to the workforce restructuring at South Deep, Tarkwa and Damang, overall workforce numbers dropped 5% from 18,594 (2017) to 17,611 (2018). The number of full-time employees declined by 37% from 8,856 to 5,601, while the number of contractors rose 23% from 9,738 to 12,010.
| Total workforce |
Employees | Contractors | Proportion of Nationals |
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| Total workforce by region | 2018 | 2018 | 2017 | 2018 | 2017 | 2018 | |||||
| Americas | 2,322 | 373 | 365 | 1,949 | 1,669 | 100% | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Australia | 3,1761 | 1,577 | 1,449 | 1 5992 | 888 | 100% | |||||
| South Africa | 4,643 | 2,472 | 4,012 | 2,171 | 2,420 | 85% | |||||
| West Africa | 7,370 | 1,079 | 2,910 | 6,291 | 4,761 | 99% | |||||
| Corporate | 100 | 100 | 120 | 0 | 0 | 94% | |||||
| Total | 17,611 | 5,601 | 8,856 | 12,010 | 9,738 | ||||||
| Category | 2018 | 2017 | 2016 | 2015 | 2014 | ||
| Total workforce | 17,611 | 18,594 | 18,091 | 16,850 | 15,440 | ||
|---|---|---|---|---|---|---|---|
| HDSA employees South Africa (%)3 | 72 | 71 | 72 | 71 | 71 | ||
| HDSA employees South Africa – senior management (%)3 | 435 | 57 | 55 | 48 | 47 | ||
| Minimum wage ratio4 | 2.396 | 2.43 | 2 | 2 | 2 | ||
| Female employees (%) | 19 | 16 | 15 | 14 | 14 | ||
| Ratio of basic salary men to women | 1.25 | 1.25 | 1.31 | 1.09 | 1.10 | ||
| Employee wages and benefits (US$m) | 442 | 506 | 482 | 435 | 468 | ||
| Average training hours per employee | 262 | 223 | 273 | 240 | 181 | ||
| Employee turnover (%) | 357 | 6 | 12 | 8 | 20 |
| 1 | Includes Gruyere |
| 2 | High increase due to the employment of contractors for Gruyere construction phase |
| 3 | Excluding foreign nationals, but including white females; HDSAs – Historically Disadvantaged South Africans |
| 4 | Entry level wage compared to local minimum wage |
| 5 | Lower ratio due to South Deep restructuring |
| 6 | Excluding Ghana, as the region only employs management level employees with the move to contractor mining. Ratio is 3.39 if Ghana is included |
| 7 | High turnover due to South Deep restructuring and transition to Tarkwa contractor mining |
Ongoing losses at South Deep during 2017 led to a restructuring exercise in Q4 2017 and Q1 2018 during which 261 employees and 47 managers (25% of management level employees) accepted voluntary severance packages. Despite these interventions the mine continued to experience a cash burn of around R100m (US$8m) a month, and, in August 2018, South Deep embarked on its most significant restructuring to date. In addition to operational interventions, the mine issued a section 189 notice in terms of South Africa's Labour Relations Act to its trade unions, the National Union of Mineworkers (NUM) and UASA, to reduce the workforce by around 30%.
At the end of the 60-day consultation period and after receiving submissions from the unions, South Deep started implementing the retrenchments of 1,082 employees and 420 contractors. The NUM opposed these retrenchments and commenced a legal, "no work, no pay" strike action on 2 November 2018.
The strike was characterised by violence and intimidation, with protesters blocking access to the mine in contravention of the collective agreement and court interdicts served on the NUM and its members. Although critical essential services were maintained, employees who wished to return to work were prevented from doing so by a group of around 200 NUM branch members and supporters. The mine experienced a cash burn of around R6m (US$450,000) per day during the 45-day strike as no production was possible.
Amid the continued violence, and following representations from many NUM members wanting to return to work, the NUM National and Regional suspended the NUM branch and called off the strike on 13 December 2018. On 18 December 2018 a settlement agreement was signed with the trade unions, which included the retrenchment of the affected employees and contractors. Retrenched employees received the agreed upon financial packages, portable skills training and financial advice.
As part of the settlement agreement, the NUM and management also agreed to renegotiate key aspects of the collective and other labour agreements. These were concluded in March 2019.
Our Tarkwa mine in Ghana made the transition from owner to contractor mining during 2018. As the mine matures it will incur increasing costs, which would have made the current owner mining model unsustainable. These costs include higher blasting costs as the pits deepen, increased fuel costs due to longer hauling distances, increasing cost of reagents and other input materials, high exploration costs, the cost of replacing an ageing fleet, and the year-on-year escalation of union-negotiated wage increases. A change to contractor mining at our Damang mine in 2016 has seen a significant turnaround in productivity and operational flexibility, with a potential upside in terms of the mine's longevity.
The Ghana Mineworkers' Union (GMWU) opposed the move to contractor mining on the basis that Gold Fields had no justifiable basis to change its business model. However, its application to the Labour Division of the High Court was dismissed, following which Gold Fields issued severance letters to 1,346 employees in the mining and heavy equipment (HME) department and 765 employees in other departments. Of these, 1,209 of affected HME employees were absorbed by the two mining contractors appointed and 505 of the other affected employees were re-engaged by the mine on fixed-term contracts. In Damang, a further 306 employees were moved from a full-time to a contractor basis. All affected employees received generous retrenchment packages – in line with Ghana's labour laws – and were offered financial wellness training.
We continued to focus on building a more diverse and inclusive workforce, with particular emphasis on employing more women, residents from our host communities and, in South Africa, people from historically disadvantaged communities. This forms a key pillar of the HR strategy. A diversity policy was approved by the Board during the year - in addition to increasing employee representation from diverse groups, it also emphasises the importance of ensuring that all people are treated with dignity and respect.
Diversity training was rolled out to managers, with a particular emphasis on cultural awareness and how to identify and overcome unconscious bias. This training will support our efforts to increase and retain the number of people we employ from diverse backgrounds.
Key diversity indicators include the percentage of women among our employees (excluding contractors) in management, women in mining and Indigenous/local/HDSA people:
| Australia | Ghana | Peru | South Deep | Corporate | Group | ||
| Total women | 20% | 9% | 18% | 23% | 49% | 19% | |
| Women in management | 17% | 5% | 16% | 17% | 43% | 18% | |
| Women in mining | 13% | 9% | 4% | 17% | 0% | 13% | |
| Indigenous people/localisation/ HDSA | 2% | 3% | 99% | 50% | 79% | 56% |
We continued to monitor succession planning and regional and operational level by tracking turnover rates with a focus on critical roles. The following figures indicate the extent of succession cover across the group:
The reason for the low rate at Corporate level is that we have a lean corporate structure with few supporting roles. The low rate in Ghana reflects the move to contractor mining at both mines.
At the end of 2018, we rolled out an employee engagement survey as part of the ongoing work to drive a values-based, high-performance culture. Amongst other things, the survey measured employee satisfaction; understanding of strategy; and the extent to which the work environment supports employees in the achievement of their objectives. Its findings will feed into our HR work during 2019.
In 2019, initiatives are set to be implemented to address key areas of concern in each region and measurements of living the Gold Fields values will be incorporated into employees' balanced scorecards.
We successfully concluded wage negotiations in:
High levels of employee indebtedness have resulted in the approval of just 47% of bond applications by our South Deep employees, equating to the sale of only 126 houses under the mine's Tswelopele Homeownership Scheme. A review of the scheme considered employee willingness to invest in property close to the mine and the time it could take for employees to clear their debts. Alternative options to house our employees and their families are currently being considered.
A Group Flexible Work Guideline was approved by Exco and provides regions with a framework to implement flexible work practices where appropriate and suited to local conditions.
The mental health of Fly-In Fly-Out (FIFO) employees remains an industry-wide issue in Australia. Detail on how we are addressing this issue can be found on Health.
Gold Fields continued to focus on programmes and policies that develop and retain people who are skilled and motivated to deliver sustainable value creation. These programmes and policies are fundamental to ensuring we have the skills needed to keep our business agile, innovative and well-positioned to take on the challenges in our sector. They include:
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For more details on the progress made in these programmes during 2018, visit www.goldfields.com/integrated-annual-reports.com. |
HR targets and focus areas for 2019 include the following:
This is a summarised version of the Remuneration Committee's Remuneration Report, the full version of which can be found in the Annual Financial Report.
Gold Fields' remuneration philosophy is underpinned by a pay-for-performance approach, in which people are rewarded for delivery against Balanced Scorecard (BSC) objectives.
There is a direct cascade of strategic objectives from the Group BSC - which is informed by the Group strategy - to the regional, operational, departmental and, ultimately, individual BSCs. This ensures that each individual's objectives are aligned to the Gold Fields strategy and all employees play a role in contributing to the overall value creation of the Group.
During 2018, the overall framework of our Remuneration Policy remained unchanged and no changes were made to the remuneration mix for executives. We did, however, make a number of enhancements and refinements to the implementation, including:
Gold Fields' remuneration practicesWe do:
We do not:
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| GUARANTEED PAY | ||||||||||||||
| BASE PAY (EITHER GRP OR BRP) |
BENEFITS AND ALLOWANCES |
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| Link to strategy | Link to strategy | |||||||||||||
A competitive salary for executives to ensure that their experience, contribution and appropriate market comparisons are fairly reflected. This also allows us to attract and retain the skills required to deliver on our strategic goals. |
Market-related benefits are guided by local legislation and internal policies, and aim to strengthen the employee value proposition. This provides an additional level of competitiveness in line with Gold Fields’ strategy to attract and retain highly skilled and motivated employees. |
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| Implementation | Implementation | |||||||||||||
Base pay for all employees is reviewed annually after considering benchmarks against comparator group. Group performance, economic circumstances, affordability, individual performance, changes in responsibility and levels of increase for the broader employee population are also taken into account. Changes are effective from 1 March each year. The CEO makes Exco recommendations, excluding his own base salary, to the RemCo for approval by the Board. |
Based on local market trends and can include items such as group life insurance, disability and accidental death insurance, etc. The Expatriate Policy provides that special allowances may be made in respect of, among others, relocation costs, cost of living, and the cost of education for children and their families. |
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| Policy / practice | Policy / practice | |||||||||||||
We seek close alignment between executive salary increases and increases for all non-bargaining unit employees, where practical. This is informed by inflation, which can be matched directly or above/below consumer price index (CPI). The guaranteed pay benchmark is the market median, with a significant proportion of performance-related variable pay comprising STIs and LTIs, especially for senior employees. |
In line with the approved policy, the provision of benefits complies with legislation across the jurisdictions in which we operate, and benchmarking ensures that there are competitive benefits aimed at attracting and retaining key employees. |
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| Performance measures | Performance measures | |||||||||||||
Both Company performance and individual performance against the BSC informs the individual base salary review. This is in addition to economic circumstances, affordability, changes in job responsibility and alignment across employee group. |
Not applicable |
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| VARIABLE PAY | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SHORT-TERM INCENTIVE (STI) |
LONG-TERM INCENTIVE (LTI) |
MINIMUM SHARE REQUIREMENTS (MSR) |
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| Link to strategy | Link to strategy | Link to strategy | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
This is a performance-based Group annual incentive scheme that supports value creation and motivates our people to help us achieve success. |
The long-term incentive plans award shares and/or cash to participants. This instills a sense of ownership among employees and executives, enabling:
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Executives are required to hold shares in Gold Fields, in line with best practice. This ensures alignment between executive and shareholders’ interests. |
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| Implementation | Implementation | Implementation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All Group executives, regional executives and management-level employees (Patterson D-band and above) categories are eligible to participate in the STI, subject to the achievement of applicable performance conditions. |
Previously, all eligible management-level employees who participated in the LTI plan received performance shares. From 2018 onwards, the following changes apply:
Both cash and equity-settled plans have 3-year vesting periods and annual awards with performance conditions |
CEO required to hold 200% of GRP by 31 December 2020. All other Exco members to hold 100% of GRP/BRP within five years of entry. |
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| Policy / practice | Policy / practice | Policy / practice | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employees can receive up to 200% of their target bonus, based on their personal performance rating in their BSC. No bonus is paid for a performance rating between 0 and 1,9, 100% of the bonus is paid for a performance rating of 3 and 200% of target is awarded for a rating of 4,7 to 5.
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RemCo makes matching shares available on a ratio of 1:3, which vest at the end of a 5-year period. Capped at 67% of GRP for CEO, 33% for others. Execs may elect to defer certain cash or equity awards to increase their MSR holdings. |
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| Performance measures | Performance measures | Performance measures | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individual BSC performance (35%) Company performance conditions 2018 (65% or 45% for RexCo):
Regional performance conditions (20% for RexCo) |
Performance shares and Group cashsettled
Regional cash-settled:
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Not applicable |
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The table of remuneration for executive directors and prescribed officers based on the total single-figure remuneration prescribed by King IV is displayed below. King IV requires the disclosure of a total single figure of remuneration, received and receivable for the reporting period that ties remuneration to the individual’s performance for the period.
The definitions used in the adoption of these remuneration reporting requirements under King IV follow below. These should assist in a clearer understanding of the values and related terminology used in the table of remuneration.
Reflected
In respect of the LTI plans, remuneration is reflected when performance conditions have been met during the reporting period. If the only remaining vesting condition is continued employment, the remuneration is reflected in the period when all other performance conditions have been met. Remuneration included may not have legally transferred to the individual, and the individual may not yet have the unconditional right to enjoy the benefits thereof.
Settlement
This refers to remuneration that has been included in the total-single figure remuneration in respect of any prior period but has only been unconditionally transferred to the individual concerned in the current period.
Not yet settled
This refers to remuneration that has been included in the total single figure of remuneration in the current period but has not been unconditionally transferred to the individual concerned in the current period, or where an election has been made by the individual to defer the settlement thereof in fulfilment of their minimum shareholding requirement.
Unconditional transfer
Means that the individual now enjoys full right to the remuneration (excluding any applicable clawback), and it is no longer subject to any further service, employment or other conditions.
For the two executive directors, the 2018 total single figure of remuneration reported is lower than was reported for the 2017 period. The reasons are as follows:
Remuneration for executive directors and prescribed officers – All figures in US$’000
| Name | Status | Salary1 | Pension fund contribution |
Cash incentives2 | LTI plan reflected3 |
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| N Holland | Executive Director | 2018 | 1,251.6 | 26.5 | 661.5 | 1,027.2 | |||||||||||
| 2017 | 1,186.9 | 26.3 | 1,002.2 | 463.5 | |||||||||||||
| P Schmidt | Executive Director | 2018 | 626.6 | 48.2 | 306.2 | 646.4 | |||||||||||
| 2017 | 588.6 | 48.2 | 542.7 | 459.0 | |||||||||||||
| L Rivera8 | Prescribed Officer | 2018 | 668.6 | 72.8 | 134.0 | — | |||||||||||
| 2017 | 626.3 | 48.4 | 270.4 | — | |||||||||||||
| A Baku9 | Prescribed Officer | 2018 | 808.0 | 185.8 | 634.8 | 621.9 | |||||||||||
| 2017 | 784.7 | 180.5 | 719.8 | 463.5 | |||||||||||||
| R Butcher | Prescribed Officer | 2018 | 384.5 | 37.3 | 192.4 | 90.3 | |||||||||||
| 2017 | 353.0 | 37.9 | 278.5 | — | |||||||||||||
| N Chohan | Prescribed Officer | 2018 | 367.2 | 26.5 | 213.9 | 248.7 | |||||||||||
| 2017 | 342.8 | 26.3 | 288.3 | 126.0 | |||||||||||||
| B Mattison10 | Prescribed Officer | 2018 | 453.6 | 26.5 | 271.9 | 410.1 | |||||||||||
| 2017 | 426.7 | 26.3 | 369.9 | 297.0 | |||||||||||||
| T Harmse | Prescribed Officer | 2018 | 369.7 | 26.5 | 215.3 | 331.6 | |||||||||||
| 2017 | 344.7 | 26.3 | 290.1 | 252.0 | |||||||||||||
| A Nagaser | Prescribed Officer | 2018 | 243.3 | 27.0 | 131.1 | 124.8 | |||||||||||
| 2017 | 228.1 | 25.3 | 192.0 | 90.0 | |||||||||||||
| S Mathews11 | Prescribed Officer | 2018 | 438.2 | 29.5 | 289.4 | 274.2 | |||||||||||
| 2017 | 397.5 | 21.2 | 326.1 | — | |||||||||||||
| M Preece | Prescribed Officer | 2018 | 541.7 | 26.5 | 168.8 | — | |||||||||||
| 2017 | 338.2 | 16.6 | — | — | |||||||||||||
| R Bardien12 | Prescribed Officer | 2018 | 274.3 | 24.3 | 150.5 | — |
| Name | Matching shares reflected4 |
Other5 | Total single figure of remuneration |
Less: amounts not yet settled6 |
Add: cash value on settlement7 |
Total cash equivalent remuneration |
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| N Holland | — | — | 2,966.8 | (1,688.7) | 1,475.6 | 2,753.7 | |||||||||||
| 942.8 | — | 3,621.7 | (2,408.5) | 677.6 | 1,890.8 | ||||||||||||
| P Schmidt | — | 2.1 | 1,629.4 | (952.6) | 1,011.2 | 1,688.0 | |||||||||||
| 157.5 | 4.0 | 1,800.0 | (1,159.2) | 891.2 | 1,532.0 | ||||||||||||
| L Rivera8 | — | 385.7 | 1,261.3 | (519.7) | 481.3 | 1,222.9 | |||||||||||
| — | 253.3 | 1,198.4 | (486.7) | 111.0 | 822.7 | ||||||||||||
| A Baku9 | — | 68.0 | 2,318.6 | (1,256.8) | 1,237.2 | 2,299.0 | |||||||||||
| 51.9 | 150.2 | 2,350.6 | (1,235.2) | 924.4 | 2,039.8 | ||||||||||||
| R Butcher | — | — | 704.5 | (282.7) | 267.6 | 689.4 | |||||||||||
| — | — | 669.4 | (278.5) | 323.2 | 714.1 | ||||||||||||
| N Chohan | — | 1.8 | 858.2 | (462.7) | 403.5 | 799.0 | |||||||||||
| 54.0 | 3.3 | 840.7 | (468.3) | 417.2 | 789.6 | ||||||||||||
| B Mattison10 | — | 2.5 | 1,164.6 | (681.9) | 672.5 | 1,155.1 | |||||||||||
| 55.4 | 1.0 | 1,176.3 | (722.3) | 622.2 | 1,076.2 | ||||||||||||
| T Harmse | — | 7.8 | 950.8 | (546.9) | 548.0 | 951.9 | |||||||||||
| 10.0 | 6.8 | 929.9 | (552.1) | 484.3 | 862.1 | ||||||||||||
| A Nagaser | — | 0.4 | 526.6 | (255.9) | 245.1 | 515.8 | |||||||||||
| — | 0.7 | 536.1 | (282.0) | 221.1 | 475.2 | ||||||||||||
| S Mathews11 | — | 4.9 | 1,036.3 | (563.6) | 514.2 | 986.9 | |||||||||||
| — | 10.0 | 754.8 | (326.1) | — | 428.7 | ||||||||||||
| M Preece | — | 0.4 | 737.3 | (168.8) | — | 568.6 | |||||||||||
| — | — | 354.8 | — | — | 354.8 | ||||||||||||
| R Bardien12 | — | 106.1 | 555.2 | (150.5) | — | 404.7 |
| Average exchange rates were US$1 = R13.20 for FY2018 and US$1 = R13.33 for FY2017. No termination payments during the year | |
| 1 | The total US$ amounts paid for 2018, and included in salary were as follows: NJ Holland US$406,700, P Schmidt US$124,150 and BJ Mattison US$88,200. The total US$ amounts paid for 2017, and included in salary were as follows: NJ Holland US$396,500, P Schmidt US$121,000 and BJ Mattison US$86,000 |
| 2 | The annual bonus accruals for the year ended 31 December 2017 and 31 December 2018, paid in February 2018 and February 2019, respectively |
| 3 | The values of the 2015 LTI Plan with a performance period ending 31 December 2017 is reflected in the 2017 figures The values of the 2016 performance shares with a performance period ending 31 December 2018 is reflected in the 2018 total single figure of remuneration based on a US$3.29 price as at 31 December 2018. The vesting date is 1 March 2019 and will be reflected in the 2019 cash value equivalent on settlement |
| 4 | The 2017 total single figure of remuneration includes the cash equivalent value of matching shares awarded in terms of the MSR policy in 2017 |
| 5 | Other includes special bonuses and incidental payments unless otherwise stated |
| 6 | Includes cash incentive, cash LTI plan and matching shares reflected for the year |
| 7 | The 2018 figure includes the bonus related to the 2017 financial year paid in February 2018 and the 2015 cash LTIP vested and settled in March 2018. The 2017 figure includes the bonus related to the 2016 financial year paid in February 2017 and the 2014 cash LTIP vested and settled in March 2017. |
| 8 | L Rivera – other payments for 2018 relate to cash in lieu of 2016 share award payable upon vesting in March 2019. His appointment package and conditions were approved by RemCo but the LTI award was inadvertently not executed hence he was never physically awarded. This value reflects the equivalent cash compensation in this regard. Cash Incentives include legislated bonus portion. Company contributions to pension erroneously not reported previously |
| 9 | A Baku – other payments for 2018 relate to approved profit share bonus payment approved and 2017 relates to leave allowance in line with related policy. |
| 10 | BJ Mattison – other payments for 2018 relate to a service award in line with Company practice. |
| 11 | S Mathews – other payments for 2018 relate to bonus payment in lieu of most improved operation bonus scheme. |
| 12 | R Bardien – Appointed on 1 February 2018. Other payments relate to sign on bonus. |
