"So Alnby when you say improve work place agreements do you mean screw the workers. Lets not forget the blokes on the ground are keeping the wheels turning. What I find truly amazing in all this is the fact that the director and the others sitting at the round table still manage to give themselves nice little pay rises."
Red,
I always think that it is best to rely on facts when debating this sort of thing.
And fortunately, BOL's pubic announcements allow us to quantify - quite accurately - the degree to which the workers are being "screwed"and to which management is giving itself "nice little pay rises".
Some salient inputs follow below:
TIME SERIES 1:
Number of Employees at Period-End
(Average number of employees for the financial period in parenthesis)
FY2006: 1,204
FY2007: 1,373 [1,289]
FY2008: 1,435 [1,404]
FY2009: 1,277 [1,356]
FY2010: 1,225 [1,251]
FY2011: 1,160 [1,193]
FY2012: 1,145 [1,153]
FY2013: 1,025 [1,090]
FY2014: 820 [925]
TIME SERIES 2:
Salaries and Employment Benefits ($m)
FY2007: 121.5
FY2008: 144.7
FY2009: 152.0
FY2010: 157.1
FY2011: 161.9
FY2012: 129.1
FY2013: 107.4
FY2014: 92.0
Now, dividing Time Series 1 by Time Series to give:
AVERAGE SALARY AND BENEFIT PER EMPLOYEE ($,000)
FY2007: 94
FY2008: 103
FY2009: 112
FY2010: 112
FY2011: 126
FY2012: 135
FY2013: 148
FY2014: 141
Contrary to your assertion of "screwed workers", the facts say that the workers have been doing jolly nicely having, on average, received 50% pay rises over the course of the commodity boom period.
Measured another way, that's an annual rate of increase of 6%pa (would have been just shy of 8% pa if FY2013 is taken as the end period). With inflation running at less than half of the 6%pa level, that's some serious income growth in real terms, to which those HotCopper members conversant with the dynamics of the compounding effect will attest.
With around half of BOL's total operating costs made up by Salaries and Employee Benefits, the consequence of this handsome income windfall to the company's employees is that there is nothing left over for the capital providers to the business:
EBIT/EMPLOYEE ($'000)
FY2007: 49
FY2008: 35
FY2009: 25
FY2010: 16
FY2011: 20
FY2012: 30
FY2013: 21
FY2014: 9
FY2015: -4 (e)
Don't get me wrong, I'm not brutal Capitalist; I recognise fully that an economy needs to have sustainable businesses that don't owe their existence to the exploitation of people, the environment or the law.
But I think any objective observer will agree that - compared to the business owners - employees have been disproportionately enjoying the financial fruits of the business.
And I think that what shareholders will be wanting is not for a wholesale "screwing of the workers"but for the pendulum to swing back a bit closer to the Employee-Shareholder equilibrium position.
Now onto your point about management granting themselves nice little pay rises, well that, too, is not borne out by the facts.
The facts are that the CEO took a 26% cut to his total compensation in FY2014 and now earns around 5% more than he did when he was appointed in 2009.
And the Chairman and the other directors have not had an increase in their fees since 2007.
In addition, the board currently numbers 4 directors, down from 6 in 2013, so presumably the existing directors have picked up additional board duties for the same pay.
The point is that the stakeholders in the company are getting more bang for their buck from the board.
But please don't for a minute think that I'm an apologist for BOL executives and management.
On the contrary: I am on the record at saying that a big slug of the blame for the company's financial woes today, should be laid squarely at the feet of BOL management which, it is now clear, misread the cycle of their business and, as a result, spent too much on equipment and allowed the cost base (read salaries) to balloon to un-affordable levels.
I also think management has taken far too long and been far to reactive in getting the business on an even keel by normalising salaries and employee benefits (note: not "screwing workers", but merely normalising salaries to a satisfactory level that will allow the company to be able to effectively compete for new work).
But management has been left with no choice now, so this "cost normalisation" process has indeed started.... which is what has piqued my interest in the stock.
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