Plenty at stake for voters
By David Hutton and Jason Warick, The StarPhoenix October 28, 2011
The near-record, third-quarter earnings of $826 million announced by Potash Corp. of Saskatchewan Inc. further stoked the heated potash royalty debate between the Saskatchewan Party and New Democratic Party
Potash has quickly become the dominant issue of the provincial election campaign, which culminates with the Nov. 7 vote. Both Saskatchewan Party Leader Brad Wall and NDP Leader Dwain Lingenfelter agree billions of dollars – and the economic future of the province – are at stake as they make their case to the electorate.
PotashCorp CEO Bill Doyle, however, wasn’t talking Thursday. Although Doyle fielded questions Thursday morning from more than two dozen bankers and financial analysts during a conference call, he did not accept any calls from the media. A company spokesperson said Doyle would not be available for an interview with The Star-Phoenix.
Thursday afternoon, Lingenfelter hosted a news conference outside PotashCorp’s downtown Saskatoon offices. Lingenfelter said a greater portion of PotashCorp’s massive third-quarter earnings, and its projected multibillion-dollar total profit for 2011, should be shared with the people of Saskatchewan through increased royalty payments.
“They’re a great company. I think they do a great job, (but) the people who own the potash should be getting a fair return,” he said.
A doubling of the royalties, for example, could fund a children’s dental program, daycare subsidies and other programs proposed by the NDP in its election platform, he said.
“A nickel (of royalty payment) on a dollar simply isn’t enough. Even when I met with Grade 6 students in Prince Albert, they understand that that’s not fair,” Lingenfelter told reporters.
“We think a review of potash royalties is absolutely needed.”
Saskatchewan Party Leader Brad Wall takes the opposite view, saying no review will take place during the next four years under a Sask. Party government. Wall said there is a risk of causing “royalty shock” and scaring off new investment.
That could hurt overall provincial revenues and cause job losses, Wall said.
“If we give them royalty shock, if we start jacking around with potash in the middle of worldwide uncertainty, I think we may lose those new mines,” Wall said.
The StarPhoenix told PotashCorp spokesperson Bill Johnson it wanted Doyle’s opinion on the royalty debate, and on Lingenfelter’s criticism of Doyle’s compensation package.
Doyle made $11.3 million last year in total compensation and averaged a Canadian high $144 million per year from 2005 to 2007, when stock options were factored in, according to Financial Post magazine.
Johnson said Doyle would not be available. Johnson said Saskatchewan has the highest royalty structure in the world and the current structure strikes a “reasonable balance.”
He said PotashCorp pays “numerous levels of royalties and taxes.”
He said Doyle’s compensation package is tied to company performance, which has generally been very good.
He said the pay of executives is approved by shareholders annually.
Mike Pulak, a staff representative for the United Steelworkers, which represents employees at three mines, said he liked Lingenfelter’s proposal to increase royalties.
“I think it’s a great idea,” said Pulak following the Lingenfelter news conference. “I don’t think it will impact jobs at all.”
Read it as a PDF: PotashCorp’s Q3 windfall spurs political debate