Blue-chip Bosses Bear Brunt As Peru Slowdown Hits Executive Pay

Pass the hat for Peru’s blue-chip executives.

Firms of Peru’s top stock index, the IGBVL (Indice General de Bolsa de Valores de Lima), paid out 16 percent less in salaries in 2014 on a year earlier.

The 24 firms of the index’s total 29 that provided results paid their directors 44.2 million soles ($15.8 million) this year, according to data compiled by the El Comercio newspaper.

Mining firms and banks dominate the main stock index and performances have suffered from a decelerating economy and weaker currency.

The share of Peru’s index of top 100 firms slid 5.1 percent on a year earlier to 134.5 million soles.

That’s almost half the level of their Chilean counterparts, whose Santiago stock exchange paid more than $90 million in executive pay last year, according to the Chilean daily Pulso.

Peru’s economy may grow as little as 4 percent this year, after averaging 6.3 percent growth in the past decade. It’s nuevo sol has depreciated 12.8 percent on a year earlier, seeing revenue derived from exports fall.

Lower profits

“Many companies are paying their directors relative to profits and not revenue,” said Marco Antonio Zaldivar, a consultant at Ernst and Young. Lower profits mean less pay for directors, Mr Zaldivar added.

The mining company Volcan, the index greatest-weighted firm paid out the most at 16.4 million soles.

The average director salary in fact increased to 202,353 soles for the top 29 firms, and to 202,629 for the top 100 firms.

Even so, it and only two other firms, mining company Compañía de Minas Buenaventura and cement-maker Unacem, gave more than the average with salaries of 1.8 million, 544,000 and 532,000 soles respectively.

Diverse salaries

“In Peru, salaries are very diverse”, said Nancy Yong, an associate of PwC’s advisory unit.

Not all directors draw a salary, and some sit on several boards.

Pay can relate to their contribution and attendance at sessions throughout the year.

A director can receive between 1,000 and 20,000 soles per session, according to Enrique Diaz, president of Mercado de Capitales & Finanzas, a consultancy that specialises in corporate governance.

“I’ve seen directors that earn from $20 million a year to $500,000,” added Zaldivar.

Upbeat outlook

Mining is set to rebound in the latter half of 2014 as major projects reach max production, such as the Toromocho mine in Junin, sowing optimism for the near term.

The performance of the mining sector is integral to the word’s third copper producer, being the second largest component of Peru’s GDP after manufacturing.

Peru’s economy will grow at its fastest rate in a decade in the next two years, according to its central bank governor.


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