A look at Solid Energy’s books highlights the diseased culture of the corporate elite in this country and National’s failed bet on fossil fuels. The blistering pace that executives’ ridiculous paypackets rose at shows a culture of pocket-lining in the company. The massive expansion of liabilities in the lignite bet, which has crippled the company, was part of National’s fossil fuels strategy.
In a decade, the board’s pay rose from $200,000 to $360,000 – a 80% increase, twice the increase in household incomes over the period. The CEO is worse: with pay rising from $380,000 in 2002 to $1,350,000 in 2012 – a 255% increase.
The number of Solid Energy employees earning more than a Cabinet Minister rose from 6 in 2002 to 39 in 2012 (a further 250 were paid more than an ordinary MP). Just those 39 and the board were paid $15.5m a year – the equivalent of 310 average wages.
It’s evident that this culture of excess really took off in the past four years under National. In 2008, the CEO earned half what he did in 2012 and there were 9 people on more than a Cabinet Minister’s pay, not 39.
And the debt, Jesus, the debt. Governments encouraged SOEs to have a more ‘active’ balancesheet – ie. to take on more debt and use that money to pay larger dividends, rather than have reserves of cash – and Solid Energy happily complied. It’s that crazy capitalist thinking that the golden days will last forever. Solid Energy’s liabilities rose from $88m in 2002 to $743m in 2012 – a 744% increase.
Nearly half a billion dollars of debt was taken on in the past four years as National cheered on Solid Energy’s crazy (economically and environmentally) plans to turn lignite into diesel, briquettes, and fertiliser. Hey, times were good for coal, and the Nats wanted to see more fossil fuel exports. And if there was one lesson any businessperson should have taken from the Global Financial Crisis, including the CEO of a public asset getting paid over a million bucks a year, it’s that good times never end.
Of course, the good times did end. The price of coal has collapsed, the exchange rate went up, the lignite dream is dashed, hundreds of jobs are on the line, and the taxpayer is left holding the sooty baby while Don Elder and all the wide boys stroll off with millions of dollars of our money in their pockets.
The massive bet on fossil fuels that National has made by placing them at the heart of its economic agenda has failed to deliver once again only this time it’s not a matter of foreign oil companies wasting their money and walking away, it’s one of our SOEs up to its eyeballs in debt.
(btw, why the fuck is Solid Energy’s website coalnz.com? What a pretentious, confusing thing to do)