Coal companies collapsing; top executives fill their pockets with more cash than ever
Over the past five years, 300 U.S. coal mines have shut down, more than 200 coal-fired power plants have closed up shop, 25 coal companies have gone bankrupt and others may soon follow suit, and the fossil fuel divestment movement is succeeding at universities, municipalities and elsewhere, including investment funds. That’s good news for the planet even though it is costing thousands of jobs.
While some of this collapse has emerged out of political action, the greatest impact has come from a combination of market forces from cheap natural gas pried from the ground by fracking. And it’s persuaded private investors to move away from new coal projects. Simple economics.
The ledgers of coal producers are obviously showing the strain. For instance, Peabody Energy, one of the industry’s giants has seen its stock fall from $72 a share in 2011 to the $2.06 it was trading at Wednesday morning. Arch Coal fell from $3,600 a share in 2011 to $6.36 as this is being written. These two companies are the nation’s largest coal producers and they could be bankrupt before the year is out.
But, as Tim McDonnell writes at Mother Jones, top executives at coal companies are raking in more bucks than ever as the bottom line of their operations dwindles:
According to a report today from the Institute for Policy Studies, which bills itself as the country’s oldest progressive think tank, executive salaries and bonuses at the top 10 publicly traded coal companies increased an average of 8 percent between 2010 and 2014, even as the companies’ combined share price fell 58 percent. Meanwhile, the same executives cashed in well over $100 million in stock options, according to the report, which analyzed the companies’ public filings with the Securities and Exchange Commission. In other words, coal execs are cashing in while their companies tank.”That [stock-based] part of their compensation package is not so valuable right now, so the value of their cash-based pay has been going up,” said Sarah Anderson, the report’s author. “We’re seeing this move to insulate them from the implosion of the coal sector by handing out more cash.”
That’s not criminal. But it does show the stupidity of how executive compensation works these days. Bonuses and stock options when times are good, higher cash compensation when the company tanks. The so-called “war on coal” has been good to them.
They could have done things differently to benefit both their shareholders and the climate.
From the IPS report:
Bonus incentives: None of the 30 oil, gas, and coal companies on our list reward their executives for diversifying into green energy or reducing greenhouse gas emissions. A review of the 13 oil producers on our list revealed that all of them reward executives for expanding carbon reserves.Retirement security: The ongoing disregard for our environment that fossil fuel executives have shown has left the future much less secure for billions of people around the world. These same executives, meanwhile, can all look forward to lavishly secure futures. Executives at America’s top 30 oil, gas, and coal firms have accumulated company-provided retirement assets worth a combined $1.2 billion, enough to cover the entire flood control budget of the U.S. Army Corps of Engineers for nearly three years. […]
The CEOs of the 30 largest U.S. publicly held fossil fuel companies took in an average $14.7 million in 2014, over 9 percent more than the average $13.5 million that went that year to S&P 500 CEOs. […] The 30 fossil fuel CEOs had outsized pay packages, despite leading companies with market caps that are smaller on average than the S&P 500.
Ordinary American taxpayers prop up this stratospheric pay for oil, gas, and coal executives through federal subsidies to fossil fuel companies. According to Oil Change International, these subsidies run about $37.5 billion per year.
It’s a grotesque system that penalizes workers, investors, taxpayers and the planet itself while rewarding a cabal of numbskulls whose myopic policies have kept us headed into the ever-growing climate crisis long after critics warned us and them it would happen.
As Anderson told McDonnell: “The smart thing would have been to diversify their portfolio so they wouldn’t be so vulnerable.” And the smartest thing would have been to diversity into renewables.
(Originally appeared at DailyKos.)