Contact clicks on 'golden handcuffs'

By CHRIS DANIELS

Share market darling Contact Energy has unveiled a new golden handcuffs plan to keep its top executives with the company.

The plan comes less than a week after Contact's 51 per cent owner, United States energy giant Edison Mission, sold its stake to Australian company Origin Energy.

Contact chief financial officer John Bole, general manager trading Stephen Cross, general manager corporate development David Hunt, general counsel Ross O'Neill and general manager operations David Thomas get an additional payment of 15 per cent of their base salary. This money is used to buy Contact shares in three years' time, should performance targets be met.

Chief executive Stephen Barrett, who is seconded to Contact from Edison Mission and was paid $1.2 million last year, will not join the new scheme.

Although no announcement has been made, Barrett is likely to leave the company once Origin Energy takes over ownership of the Edison stake later this year.

Contact chairman Phil Pryke said the scheme was designed to reward senior executives for their efforts to create shareholder value, but without creating "sharply skewed incentives that could distort behaviour".

The number of shares bought will be calculated based on the share price at the start of the three years. The greater the increase in value, the better the reward. The minimum performance goals include earnings, dividend and share price appreciation targets.

The shares would be bought on market and the executives would lose any rights if they are dismissed or resign. They or their families can still get the shares if they are made redundant, get sick or die.

A company spokesman said the new executive payment scheme had been developed over some time and was not related to the change of ownership.

How sweet it is

Value: 15 per cent of salary a year.

Form: Shares bought after a minimum of three years.

Hurdles: Beating shareholder returns and earnings targets.