April 6 (Reuters) - U.S. fertilizer producer Mosaic Co boosted its chief executive officer’s pay last year by more than $5 million as a reward for slashing costs and jobs, a regulatory filing shows.
Construction of excess potash capacity and fiercer competition have pressured the sector, and leading North American producers Mosaic, Potash Corp of Saskatchewan and Agrium Inc have chopped expenses.
Mosaic CEO Jim Prokopanko collected $5.3 million more in stock awards last year, taking the value of his pay package to $14.8 million, up $5.5 million, according to a filing last week.
Mosaic executives got shares as an incentive to save costs, spokesman Ben Pratt said.
Minnesota-based Mosaic, which has a $16.4 billion market cap, said in 2013 it would cut $500 million in operating costs over five years, including about 550 jobs. Prokopanko said on March 31 that the company was ahead of schedule in finding savings.
The recent filing said cost-cutting incentives “enhance our alignment of executive compensation with stockholder interests and will significantly benefit us and our stockholders by helping ensure that Mosaic remains a low-cost producer.”
Mosaic’s stock price and net earnings both slipped about 3 percent in 2014.
Shareholders will vote on Mosaic executive pay and the incentives at its May 14 annual meeting.
Rewarding executives for cutting jobs and costs is “a very bad idea,” said Yvan Allaire, executive chair of the Montreal-based Institute for Governance of Private and Public Organizations.
“In terms of the sense of sharing, the spirit that, ‘we’re all in the same boat in this company,’ what we do with this (pay approach) really is create two boats - a yacht and a very small dinghy,” Allaire said.
Potash Corp paid former CEO Bill Doyle and other executives more in 2014 largely because of interest rate fluctuations that affected the company’s short-term pension obligations, spokesman Randy Burton said.
Doyle, who was replaced as CEO midway through 2014 but remained senior adviser, earned $7.9 million, up from $6.4 million. His salary was unchanged at $1.3 million and Doyle received no stock awards.
Agrium paid CEO Chuck Magro $6 million in 2014, his first year on the job, slightly less than it did in 2013 when he was chief operating officer. The reason for the difference was that Magro received a one-time share grant in 2013 when he was appointed to succeed the previous CEO, spokesman Richard Downey said. (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Jonathan Oatis)