KEY POINTS:
The New Zealand Exchange has offered chief executive Mark Weldon a more modest bonus package than the one it proposed earlier this year which sparked a shareholder outcry after revelations that Weldon could have ended up with nearly 10 per cent of the company.
Under the new scheme, which also involves a cash component, the maximum amount of shares Weldon could receive if he achieves his entire bonus is 1.44 per cent of the company.
Added to his current 5.2 per cent stake, that would take his total shareholding to around 6.6 per cent, worth $15.4 million at current share prices.
In March, the NZX released a proposed bonus scheme that could have seen Weldon end up with up to 9.7 per cent of the company, worth $22.5 million. The scheme was dropped after major shareholders objected and the NZX board promised to come up with alternative scheme, which it released yesterday.
NZX chairman Simon Allen said the exchange had spoken to large NZX shareholders and was confident it would be approved by shareholders at a special meeting early next month.
"People feel it's a good scheme which aligns the company, and therefore the shareholders, with the CEO performance," Allen said.
Both the old and the new schemes involved lending Weldon interest-free money to buy NZX shares at today's prices. If he achieves his targets, the shares would vest in his name and his gain would be any rise in the share price.
Major NZX shareholders, such as Fisher Funds Management and GPG, had complained that the hurdles to achieve the bonus in the original scheme were too low: Weldon had to achieve total shareholder return - the share price rise and dividends - of 10.5 per cent or more per year. Shareholders said that this could have been met if the sharemarket in general was rising.
Under the new scheme, which runs to 2010 but can be extended a by a year, NZX earnings per share would have to have a compound annual growth rate of 15 per cent per year. If this was achieved, Weldon would receive a bonus of $500,000 a year and up to 222,276 shares.
Furthermore, should NZX earnings per share achieve compound annual growth of 22.5 per cent, a further 128,381 shares would vest in Weldon's name.
Allen said he expected Weldon would remain at the NZX for the 4 1/2-year term of the bonus scheme.
Bonus scheme
* If NZX earnings per share achieve 15 per cent compound annual growth, Weldon receives a bonus of $500,000 cash per year and a total of up to 222,276 shares which would vest in his name.
* If NZX earnings per share achieve 22.5 per cent compound annual growth, a further 128,381 shares would vest in Weldon's name.
* Weldon pays today's prices for the shares and is given an interest-free loan to cover the cost.
* The scheme runs until 2010 but can be extended to 2011.
