Will Anglo American’s investors think the newest boss is really worth £5.3m?

Mark Cutifani ought to have his hard hat on. The last two chief executives of Anglo American before him were bulldozed out by angry shareholders and now, almost exactly a year into the job, the new boss has provocatively dumped his £5.3m pay deal in front of them.

The Australian-born Cutifani has the distinct advantage over his immediate predecessor, Cynthia Carroll, of being both a qualified mining engineer and a man. But still, the proposal to extract £2m compensation for the loss of incentives at his previous job, plus £836,000 to cover the move from Johannesburg, is a brave ask.

Last year, investors gave Cutifani a bloody nose after just a few weeks at the FTSE 100 mining giant when 28pc voted against the remuneration report. Now they have the details, what will happen at the annual meeting next month?

“They will vote and we will see,” says the no-nonsense Cutifani. “We’ve made quite a few changes since last year, and I’m good with that.” He accepts the pay deal could have been improved with more performance links. But, frankly, his focus is on the rich seam of problems at Anglo. If he can properly extract and resolve those, shareholders will gladly part with any pay deal, however gold-plated.

Cutifani, a father of seven, is not the first to try. Anglo has been an almost permanent problem for investors for more than a decade. Founded in 1917 when Sir Ernest Oppenheimer persuaded Herbert Hoover, the future US President, to invest in a South African gold mine, Anglo has since expanded into a sprawling, diversified miner with interests ranging from copper and nickel to platinum, gold and diamonds (through its De Beers subsidiary).

In 2006, the then-chief executive Tony Trahar, an Anglo lifer of 30 years, was ousted amid investor complaints that the miner did not have a coherent strategy and its share price was lagging behind rivals Rio Tinto and BHP Billiton.

Carroll – a shock replacement, as much for being an American geologist as female – reduced the headcount by 50,000 and sold $11bn (£6.6bn) of assets. But her disastrously expensive $5.5bn acquisition of the Minas Rio iron ore project in Brazil eventually cost Carroll her job, too.

She was not alone. By then, the hubris that had gripped all the big global miners was fully exposed by falling commodity prices. Some 20 mining bosses stepped down during 2012, including Tom Albanese, who quit Rio Tinto after a $14bn write-down. BHP, Xstrata and Vale all saw changes at the top.

In this environment, Cutifani was a gem to discover for Sir John Parker, chairman of Anglo, who was in search of a new chief executive. Cutifani says: “I was pretty lucky because I hadn’t made a major strategic blunder and hadn’t blown up a project – that was an advantage.”

Cutifani was born in Wollongong, a coal mining area south of Sydney. Three months before he was due to start at law school, he signed up for a cadetship at the local deep mines.

He worked his way up the industry around Wollongong for 12 years. He then moved west to head up Sons of Gwalia, Australia’s largest gold operations, in 1988. On the way, Cutifani developed a reputation as a fixer and a cost-cutter. He also learned the importance of safety after a friend of his was killed in a mine.

He was headhunted to become chief operating officer at Inco, the Canadian nickel giant which needed radical restructuring. Over five years, he saw Inco’s share price rise from $18 to $86 – at which point it was sold to Vale.

Cutifani caught the attention of AngloGold Ashanti, the South African gold miner that was in trouble with a hedging strategy that had backfired. He became chief executive of the company, which was 40pc owned by Anglo American, in 2007. “We had a massive hedge book that was out of the money, but also 70pc of our operations were losing money, we had big debts and we were killing one person every 10 days,” says Cutifani. He drove an impressive turnaround, including helping Anglo to exit its position.

He’d done enough to impress Sir John, who appointed him as chief executive of Anglo in January last year. Cutifani says he has “never made a critical comment about Cynthia” but his views were clear enough when he arrived on his first day with a report he’d penned entitled Starting on the Right Foot.

His prognosis was dire: he reckoned the company’s under-performance was costing it between $3.5bn and $5bn in earnings. But he refused to accept some investors’ demands to break up the business – in the short term, at least. Instead, he set a punchy target of boosting earnings by $3.5bn and doubling the return on capital to 15pc by 2016. “If we can’t deliver that sort of improvement, then we should think of a different model,” he says. “But if we can, we will have demonstrated the value of being the diversified company that we are.”

Cutifani says identifying the issues has been “relatively straightforward”: inconsistent operating practices, poor project delivery and a drastic loss of technical skills. His immediate response was to insist on “getting back to earning more than we’re spending”. He then divided the turnaround into three stages: “We said we needed to fix what we could in 12 months to prove we’re on top of the basics,” he says. “Second, we needed to get the best out of our resources to improve our operating performance – that’s the $3.5bn target. Third, we needed to make smart investments in those resources to deliver cash and returns in the long haul.”

His first move was to sell the corporate jet. “I’ve halved the costs of the chief executive’s office since I joined,” he says.

In February, Anglo delivered $1.7bn of annual pre-tax profits compared to a $171m loss in 2012. The net earnings contributions were around $800m. Cutifani says it’s a good start. “We improved nickel production by 40pc, coal production in Australia by 35pc and copper production by 20pc,” he says. “We saw a big turnaround at De Beers and a solid – not great, but solid – performance in platinum. The one negative was iron ore, but we have a plan to rectify that within 12 months.”

Anglo’s shares have under-performed rivals in the past year. But Cutifani is confident that investors will start to see the company as a better bet than rivals.

He still faces tough headwinds. In South Africa, Anglo, along with other companies, is still battling with strikes at its platinum mines. “Four out of five unions have gone back to work,” he says. “But 50pc of our operations are still out of action. That’s tough.” Equally, there are “still hurdles” in Brazil.

Analysts have put out tentative “buy” notes, arguing Anglo has at least been over-sold. Investors are also softening. “The feedback from shareholders has been robust, based on the disappointments from the past, but generally supportive of the approach we’ve been taking,” he says.

Some analysts believe Cutifani’s projections are unrealistic, but he is not discouraged. “I’d much rather they said I was being too aggressive than they thought that I’m not challenging the organisation and, ho-hum, here we go again,” he says. “This is a different world, this is a different organisation and we’re going to have a different future.”