KEY POINTS:
Senior employees at Rubicon will no longer get paid a cash base salary.
The listed biotechnology and wood products firm said yesterday that under a new plan, the top three employees would not get any base salary for two years, instead receiving shares of the equivalent net value.
Shares closed up 3c yesterday at 94c.
The company yesterday issued 1.5 million shares at 93c each underthe plan - equivalent to 0.6 percent of the issued capital and $1.4 million of after-tax base salary.
The participants were paid the equivalent of two years' base salary which they reinvested in new ordinary shares. The shares cannot be sold for two years, with provisions for shares and distributions to be returned should an employee leave during that time. No more shares will be issued under the plan.
Chairman Stephen Kasnet said the plan aimed to align management with shareholders. It would also reduce the company's cash-overhead base. "In essence, we have converted fixed base salaries into Rubicon equity."
Under the plan the top three employees were also required to buy $450,000 of shares on market.
"The willingness of our employees to invest considerably in Rubicon shares should indicate to the market the potential value they see in the company," Kasnet said. "They will share in the risks and rewards of ownership in just the same way as all other Rubicon shareholders do."
Chief executive Luke Moriarty called it "a strong signal to the market of the value we see in the company."
According to Rubicon's annual report, Moriarty's pay packet last year was $490,000 base salary and $183,750 performance incentive.
Shareholders Association chairman Bruce Sheppard said it was a good plan.
"We've prepaid ... salary, that's the only thing we've done, and we've paid it in shares, not cash, which effectively gives management an incentive to recover at least that which they've forfeited ... over the next two years plus a margin.
"For once it is a better deal for shareholders on the face of it than it is for the workers and they are to be commended on this."
Steve Walker, managing director of stakeholder Walker Capital Management - which holds about 7.5 per cent - said the plan gave key executives more incentive to achieve their goals. He was not concerned about the dilution of ownership.
Pay scheme
* New packages aimed at top three employees.
* No base salary for the next two years.
* Employees to be paid equivalent in shares.
* $1.4 million of net base salary affected.
* Plan also requires the employees to buy shares.