Senior executives of newly listed, state-controlled Mighty River Power are in line for shares in lieu of cash bonuses worth $1.2 million for the year to June 30, one of the company's first disclosures to the NZX and ASX as a listed company show.
Some $418,750 of that total will be owed to chief executive Doug Heffernan, assuming bonus benchmarks are met. Heffernan draws an annual base salary of $934,125 and earned a total of $1.49 million after bonus in the year to June 30 last year.
Heffernan, MRP's founding chief executive, is also being paid an additional $500,000 for agreeing to stay with the newly part-privatised company until June 30, 2014.
The rest of the company's senior executives are also being offered MRP shares paid as bonuses worth up to $1.44 million if new performance benchmarks are met under a revised long term incentive scheme in the 2015 and 2016 financial years.
The disclosures show that of the five senior managers covered by the long term incentive scheme, only Heffernan and MRP's development general manager Mark Trigg spent their own money to buy shares in the MRP float.
Counting bonus shares that will only vest if they hold their shares for a minimum of three years, trusts associated with Heffernan bought two lots of 6,200 shares, while Trigg bought 10,100 shares.
General manager of operations, Fraser Whineray, retail general manager James Munro, and chief financial officer William Meek did not buy shares in the May 10 float, which saw 113,000 New Zealand retail investors buy 49 per cent of the company along with local and foreign institutional investors.
The government retains a controlling 51 per cent interest.
The existing bonus scheme ties bonus payments to the company's "total shareholder return performance relative to benchmarks."
However, the new plan will benchmark performance to MRP's share price performance against the NZX50 index of the country's top 50 listed companies, with half of the available bonuses payable if MRP performs above the 50th per centile for the index.
They will be eligible for their total bonus if the shares perform at or above the 75th per centile for the index.
MRP is New Zealand's second largest listed electricity company, after Contact Energy and displacing TrustPower, and is expected to be included in the NZX50, perhaps in July, once it has satisfied NZX rules requiring shares to trade and demonstrate their qualification for inclusion.