Ask almost anyone who they think did most damage to Lonmin over the past decade and chances are - unless you're asking a member of the Association of Mineworkers and Construction Union - they'll say union president Joseph Mathunjwa. But there is possibly a more deserving contender for the title, and he comes not from the ranks of the workers but from that of the executives. Brad Mills, Lonmin's CEO from 2004 until he resigned in September 2008, has been described by one leading analyst as "responsible for converting Lonmin from a low-cost producer to a troubled mining company".In that period, operating out of the company's head office in London, Mills drove an investment programme aimed at mechanising mining operations and reducing labour requirements. Only after billions of rands had been ploughed into the project did it become evident that the mines' geological structure was not suited to mechanisation.Critics say being based in London undermined the board's ability to oversee the company's operations, which meant Mills was rarely challenged.mini_story_image_hleft1"He broke the back of the toughest platinum mining company we had. It never recovered," said the analyst.However, unlike Mathunjwa, Mills, an American headhunted from BHP Billiton, was paid a fortune by Lonmin. Over his five years at the helm he received total remuneration of £15.6-million. Even allowing for the much stronger rand back in 2004, Mills's remuneration in pounds was extremely generous. In addition, he was awarded just over a million shares during his tenure. In this period, Lonmin shares traded between a high of £22 in 2007 and a low of £2.50 in 2008, when Mills left.Over the same period, contract workers at Lonmin saw little increase on the R5000 a month they were paid. Blue-collar workers did better, with their nominal average earnings increasing from R5000 to almost R10000 a month. In this winner-takes-all system, confrontation between management and workers (once they were organised) may have been inevitable.In the opening paragraph of Capital in the Twenty-First Century, French economist Thomas Piketty refers to the strike that led to the 2012 tragedy at Lonmin's Marikana mine. "As often in such strikes, the conflict primarily concerned wages: the miners had asked for a doubling of their wage from à500 to à1000 a month."Piketty says the dispute is a tragic reminder of the conflict over sharing the spoils of economic activity. And so "Marikana" becomes the launch pad for his 577-page discussion of global inequality.Three years after the tragedy, we're in the dying days of a platinum boom that generated huge returns to shareholders of the three big platinum companies - Lonmin, Anglo American Platinum and Impala Platinum - and supported hundreds of thousands of jobs. But the long-term benefits of this once-valuable industry seem limited to the enormous wealth accumulated by a relative handful of executives.Behind this reality are remuneration policies that demonstrate just how out of control and out of touch executive pay is.Back in 2004, the Lonmin remuneration committee said glibly: "The primary role of the directors is to deliver value to shareholders and it's against this backdrop that their remuneration must be assessed."Unaware of the destructive force it had unleashed, the committee talked of the need to use generous packages to motivate and retain the best people. The flawed assumption is that great generosity guarantees getting the best people. In this case (as in all commodity-related companies), the Lonmin remuneration committee assumed that profit and share-price growth were due to the efforts of its executives.story_article_right1It chose to ignore the dominant role played by the platinum price and global demand, both of which were beyond executive control. And leaning even more heavily on this flawed assumption, it dished out generous quantities of shares to its executives. All they had to do was sit back, ride the boom, and then cash in their increasingly valuable shares.For a few years it seemed the full impact of Mills's strategy went unseen by the London-based Lonmin board as the surging platinum price supported earnings growth and steady share-price increases.By the time Ian Farmer, an executive director throughout Mills's tenure, took over in 2009, the extent of the damage was evident. Generous, sterling-based remuneration continued, despite collapsing profits.Over at Amplats, things did not deteriorate as dramatically, but decisions to ramp up production to take advantage of record platinum prices - which were expected to continue forever - were set to speed up the eventual collapse of an oversupplied market.As at Lonmin, each year the top Amplats executives were generously rewarded, in cash and shares, for the shareholder returns achieved on the back of the strong platinum price. Each year, the remuneration committee referred to the need to "attract and retain high-calibre executives". And without acknowledging the irony, it gave generous packages to no fewer than five CEOs between 2004 and 2014.The most stable of the three, Implats, was the last to get sucked into boosting capacity to feed the boom.Its CEOs were paid in line with their peers with packages that were beefed up through share appreciation rights, rather than share options. This meant executives were generously rewarded for the platinum-price induced surges in the share price. In an unprecedented move - but one in line with the tougher environment - in 2013, new CEO Terence Goodlace, described as a "good appointment and a calming force", opted not to receive any share-based rewards. His R7.5-million total remuneration in 2014 was the lowest in the industry.Sadly, it might be too late for moderation in this conflict-ridden industry.sub_head_start Enter the Vatican to lay the animal spirits to rest sub_head_endIt was probably not just the timing - coinciding as it did with the wrapping up of his book - that saw the Marikana tragedy feature at the very beginning of Thomas Piketty's Capital in the Twenty-First Century. What better way to launch into a lengthy discussion on capitalism and inequality than with a description of events in an industry that represents "capital" heavily dependent on "animal spirits"?As British economist John Maynard Keynes saw it, when contemplating investment in the face of deep uncertainty, only a manic, driven, strong-willed person (possessed with what he termed "animal spirits") would put capital at risk. It doesn't get deeper or more uncertain than mining, where the risks are high and the quantity of capital needed is eye-watering.The prospect of boom conditions, such as those that prevailed in the platinum industry for the first 10 years of the 21st century, is what makes it all worthwhile for the manic, strong-willed investor. But the conditions that enabled the sort of returns enjoyed by platinum investors up to early 2012, despite Eskom's challenges, are unlikely ever to be repeated (and certainly not in the Rustenburg region). It's not just that the rich, easy-to-access ore has been mined, but, as importantly, the operating environment has changed dramatically.story_article_left2When platinum demand recovers, investors will have to work out how to deal with a better organised and probably more militant labour force. In addition, as they also become better organised, it will be increasingly difficult and expensive to relocate communities from areas targeted for mining.Sadly, the only player that might fail to become better organised is the government. It looks set to continue to be unable or unwilling to engage constructively with any grouping in the industry."They don't take mining seriously, they're not aware of how crucial it is to South Africa in terms of foreign exchange and investor confidence," was the response of one analyst to the shock announcement that the little-known Mosebenzi Zwane was replacing Ngoako Ramatlhodi as mineral resources minister. "The industry's difficult situation has just got much worse. Government doesn't understand how long things take and how important it is to have stable policy."The lack of a vision for the industry is not new. One industry source reckons that the last evidence of "inspired leadership" from the government saw a platinum cartel put in place by Russians, Canadians and South Africans - in 1946.But until 1991, the industry had a comparatively free hand: there was little in the way of environmental restrictions, communities had no voice and labour was only beginning to get organised.A monitor for the Bench Marks Foundation - which is concerned with good corporate governance - said: "A frontier-type mentality prevailed in which the animal spirits thrived." All of that has changed.In a bid to cope with the changes, mining companies around the world have turned to an unlikely party, the Vatican, for some insights into how to engage with communities and workers. Unfortunately, there's still the government.crottya@sundaytimes.co.za..