It doesn’t really sit well does it? Caltex Australia is making huge profits — $619 million, up 1% on 2017 as higher global oil crude prices and refiner margins boosted annual revenue 19% to $21.4 million. So shareholders did well, and of course so did CEO Julian Segal who was paid more than $8 million in salary, bonuses and long-term incentives, up from the $7.80 million paid for 2016. The year before, Segal was paid a total of $13.85 million, making a total of close to $29.7 million for the three years.

And guess what: there was no apparent penalty for Caltex’s franchisee pay and conditions scandal, and nary a sign of any financial damage to Caltex’s revenue. By rights there should have been a big hole in the company’s profits and Segal’s salary for what the Fair Work Ombudsman has confirmed, as reported this morning by the AFR, is the systemic rorting of pay and conditions in the Caltex franchise network.

While Segal and the board were being paid millions of dollars in salary, they turned a blind eye to those franchisees who were screwing over employees, or ignored the problem until it was revealed in a 2016 report by AFR journalist Adele Ferguson. This morning, Ferguson revealed the contents of the Fair Work Commission Ombudsman’s (FWO) report detailing how Caltex Australia allowed this to happen. The FWO found that 76% of Caltex stores audited were exploiting workers.

This comes a week after Caltex surprised the industry with an announcement it was exiting franchising at a cost of up to $120 million. Ombudsman Natalie James said that she was “not surprised” by the announcement.

Segal denied the dramatic change had anything to do with the underpayment scandal. “The decision to take over the operations has nothing to do with the franchise underpayment issue,” he told reporters last Tuesday.

He would say that, considering that he and the Caltex board knew the FWO report was coming after being called into a meeting with the Ombudsman. Caltex was forced by Ferguson’s original report to begin auditing its franchisees from October 2016. And yet rather than penalising him — the CEO on whose watch this rorting occurred — the board allowed him to be paid more than $15.8 million for 2016 and 2017.

The total remuneration in 2015 reflected the sharp rise in the Caltex share price as a series of restructurings overseen by Segal started to pay off, and the dead hand of Chevron (the US oil giant with a 50% stake) was removed after it exited the share register.

Key performance indexes for Mr Segal and other senior executives are linked to profit, share price, dividend growth and employee safety. But there is no regard for any employees, franchisees or other indirectly employed staff who have been exploited. That’s a rort in itself.

Peter Fray

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