Connect with us

Top Stories

High coal prices deliver CEO bonuses, what about workers

Published

on

Over the past couple of months, we have seen several Australian coal producers report exorbitant financial year profits off the back of record-high coal prices.

A sustained period of Newcastle thermal coal spot prices of over US$400 a tonne has injected billions into company profits and millions into the pockets of CEO, in the form of bonuses. After all, coal mines are generally turning a profit when prices are anywhere above US$100 a tonne, so current profits are triggering performance bonuses.

BHP recorded full year Australian coal profits of US$8.1 billion up from US$0.4 billion the previous year. While much of that was from metallurgical coal produced in Queensland, it included US$1.8bn (A$2.8bn) from Mt Arthur in the Hunter Valley, after the mine made a loss in the 2021 financial year. This turnaround is all due to the record coal price – an unanticipated windfall for industry fuelled by global conditions including the Ukraine war.

BHP CEO Mike Henry has personally benefited. His total remuneration for the financial year was US$14.67 million, with his base salary of US$1.7 million dwarfed by US$3.9 million in cash and deferred shares and a US$8.7 million long-term incentive bonus. Yet, BHPs own financial report concedes that some US$5.2bn of its US$5.5bn increase in underlying earnings can be attributed to factors out of BHP and Mike Henry’s control, primarily very high commodity prices.

It’s the same story over and over. At Whitehaven Coal, elevated coal prices carried the company to a 1396% increase in cash earnings, while CEO Paul Flynn’s A$1.87 million cash and deferred equity bonus assisted his total remuneration package in reaching A$4.5 million.

When union representatives bargain for new Enterprise Agreements during times of high coal prices and profits, employers invariably come back with the argument that high coal prices don’t last. It’s a cyclical industry and companies don’t want to commit to annual pay rises they may not be able to afford when prices invariably fall, leading to lay-offs. Many in the industry have been through coal price ‘busts’ and know how difficult that is.

Of course, we will always advocate for the best annual pay rise possible and having strong and active union membership at a site is the best way to achieve it. But if the companies won’t stump up for substantial pay rises at times like the present, when prices are sky high and profits are rolling in, then they should look to their CEO bonuses for inspiration about a fair and sustainable way to share some of their windfall with workers.

Worker bonus schemes which are one-off or are linked to commodity prices help retain skilled workers and share the benefits of high coal prices around the communities without committing mining companies to the cumulative commitment of funding annual pay rises.

Whitehaven already has a bonus scheme in place, providing workers across its sites with retention bonuses of up to $5000 a quarter in recognition of high coal prices, that look set to continue for a while yet.

As our union representatives continue bargaining for new Enterprise Agreements across the District, we will keep pushing mining companies for ways to share the benefits with workers, not just executives and shareholders.

Robin Williams

District President MEU Northern Mining and NSW Energy

Copyright © At The Coalface Communications Pty Ltd

Processing...
Thank you! Your subscription has been confirmed. You'll hear from us soon.
Subscribe to @theCoalface Newsletter
ErrorHere