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The senior executive team at Canadian copper miner First Quantum Minerals Ltd. FM-T got substantial compensation bumps and favourable performance reviews in a year the company was forced to shut down its biggest mine, and its stock lost more than half its value.

Late last year, Vancouver-based First Quantum shuttered the Cobre Panama mine after Panama’s Supreme Court declared its mining contract was unconstitutional. The giant copper mine in Panama accounted for about half of First Quantum’s revenue.

The company’s financial condition deteriorated so much in the aftermath that it was declared a “going concern risk” earlier this year. First Quantum also saw an uptick in worker fatalities at its mine sites in 2023. The miner’s share price plunged by 62 per cent last year.

Despite the company’s travails, chief executive officer Tristan Pascall, chief financial officer Ryan MacWilliam, chief operating officer Rudi Badenhorst, director of projects Zenon Wozniak and director of mining John Gregory all saw their total compensation increase last year between 20 and 38 per cent.

The year-over-year comparisons for three of five of the executives were not apples to apples, as they were promoted in 2022 from lower executive positions.

Mr. Pascall’s total compensation increased by 30 per cent in 2023 to US$4.5-million. His share-based awards increased from US$1.4-million to US$2.4-million. His cash bonus fell to US$630,000 from US$840,000. Mr. Pascall became chief executive officer in May, 2022, succeeding his father Philip, after he previously served as chief operating officer.

The biggest factor driving compensation increases for First Quantum executives was a substantial bump in share-based awards that vest over a number of years. Despite the poor performance of First Quantum’s share price in 2023, executives received the maximum amount of share awards possible under the program.

Alison Beckett, chair of the human resources committee at First Quantum, said in a regulatory disclosure that share awards are key to retaining talent. But the company also wanted to recognize achievements made by executives prior to the ruling from the Supreme Court, and “reward superior management performance” in the aftermath, she said in the disclosure.

“We believe that the decision to grant LTI awards made at maximum levels incentivize the management team to deliver on long-term value for shareholders,” she said. The company’s proxy circular also said part of the rationale for the awards is to “incentivize them in delivering a resolution to the current challenges faced by the business in Panama.”

Last month, First Quantum refinanced US$2.2-billion of its debt and raised billions more in a new financing that gives the company significant financial breathing room for the next few years.

All executives saw their one-time cash bonuses fall in 2023, but the payments accounted for a significantly smaller proportion of their overall compensation compared to long-term stock awards. First Quantum paid the bonuses at 45 per cent to 68 per cent of targets, with Mr. Pascall’s bonus paid at 53 per cent of the target. In 2022, the payouts ranged from 66 per cent to 129 per cent.

First Quantum said it reduced the cash bonus payout rate by 10 percentage points for safety reasons, because three employees or contractors were killed on the job at its mines in 2023. There were no fatalities the year before at First Quantum.

Mr. MacWilliam’s total compensation rose by 24 per cent to US$1.9-million. He became chief financial officer in September, 2022. Mr. Badenhorst’s total compensation rose by 38 per cent to US$2.35-million. He became chief operating officer in September, 2022.

The government of Panama had originally signed a new Cobre Panama contract with First Quantum into law in October of last year. But in the run-up to that pact, thousands of people took to the streets of Panama City and protested against the mine. Environmentalists, Indigenous groups and labour activists denounced the financial terms of the contract and raised concerns about the damaging environmental impact of the mine.

The Supreme Court declared the contract unconstitutional in late November and President Laurentino Cortizo ordered the mine to close.

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