Solid Energy chief's $1.1m pay packet

By Lee Scanlon of the Westport News

Dr Don Elder. Photo / Pool photo
Dr Don Elder. Photo / Pool photo

Solid Energy chief executive Don Elder received $1.1 million for the year to June 30 - the same year Solid Energy lost $40m and axed a quarter of its staff.

His pay fell $249,870 on the previous year.

However, his total remuneration is reported as $1.34 million, just $67,386 less than in 2011, because it includes performance payments earned the previous year and paid out early in the 2012 financial year.

Solid Energy's 2012 annual report reveals Dr Elder received fixed remuneration of $805,640 (2011: $780,281).

He was eligible for the same amount of performance pay, made up of long-term and short-term incentives.

The Solid Energy board gave him a long-term incentive payment of $304,129 - 75.5 per cent of the amount available - based on his performance in the three-years from 2009 to 2012.

The board also approved a short-term performance payment of $164,350 - 40.8 per cent of the amount available - based on Dr Elder's performance during the year. He declined to take the payment.

Dr Elder also advised the board in July that he would be taking a 10 per cent cut in his fixed remuneration this financial year.

Dr Elder's performance payments fell by $275,229 compared to 2011. He received 58.1 per cent of the amount available compared to 74 per cent last year.

His long-term performance payments are mainly based on creating future value: productivity, production capacity, development milestones and secure resources; plus health and safety and environmental liabilities.

His short-term payments are based on financial performance against budget, operational performance against business plan, leadership, health and safety, environment and people.

More high earners

Solid Energy had 104 more high-earning employees than in the previous year.

The company had 472 employees earning more than $100,000, compared to 368 in 2011 and 301 in 2010.

Of the 2012 high earners, 79 per cent were in the coal business and 13 per cent worked in corporate functions.

In many salary bands, the numbers skyrocketed.

The number earning between $100,000 and $109,999 rose 70 per cent to 116.

The number earning between $160,000 and $169,999 almost doubled to 32.

Twelve employees earned $200,000 to $209,999, twice as many as in each of the previous two years. Another 12 earned between $210,000 and $219,999, three times as many as each of the previous two years.

The number in the $260,000 to $269,999 bracket leapt to eight, four times as many as in each of the previous two years.

Seven employees, including Dr Elder, earned more than $500,000.

All senior employees' total remuneration is reported as the fixed remuneration for the current year plus performance payments for the previous year.

$40.2m loss

Solid Energy made a net loss of $40.2 million after impairments of $110.6m.

Revenue increased by 18 per cent to $978m - the second highest annual revenue (2009: $979.5m).

But earnings before interest and tax plummeted 120 per cent following the impairments, mainly for non-economic underground mines like Spring Creek and Huntly East, and for Solid Energy's renewable energy businesses. The loss was a 146 per cent drop on Solid Energy's profit of $87.2m last financial year.

The company paid a $30m dividend to the Government.

In his annual report, Dr Elder said the prices for Solid Energy's coking coal, its main export product, had fallen over 40 per cent from the early 2011 highs. The New Zealand dollar had remained high, further weakening Solid Energy's revenue.

After the end of the financial year, from early July, Chinese steelmaking demand dropped dramatically and prices plunged over 30 per cent. At the same time, Spring Creek mine was consuming cash and producing little coal, because it was still being developed.

In July, Solid Energy responded to the coal market downturn by making "strategic and structural changes". Dr Elder said the company aimed to generate and preserve near-term cash, while retaining capability and future growth options.

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