Rubicon discloses reward scheme

By PAM GRAHAM

Under pressure from takeover bidder Guinness Peat Group, Rubicon yesterday disclosed a "tracking units" remuneration plan for senior executives that could pay out as much as $1.3 million because of GPG's bid for the company.

The tracking units scheme is not explicitly disclosed in Rubicon's annual report, falling into the category "accrued employee benefits", described as including holiday pay, PAYE, bonuses and long service leave.

An executive option scheme is disclosed in the report, but the company has issued no options under the scheme.

Rubicon said it used tracking units rather than options because they provided incentive payments based on share price gains without diluting existing shareholdings.

At a share price of 72c, Rubicon said, the units would pay about $820,000 before tax to the eight executives managing Rubicon.

The executives have the right to trigger payment under the scheme during a takeover offer, which increases the potential payout under GPG's takeover offer to $1.3 million after tax.

Rubicon said none of the executives had exercised that right.

GPG director Gary Weiss had called on the company to disclose if it had a "phantom options" or "stock appreciation rights" plan for executive pay.

The Stock Exchange's market surveillance panel said it would investigate. In its response to the GPG inquiry, Rubicon said tracking units had been used for 20 years in New Zealand.

It said the bonus payments to executives through the tracking units were not excessive in view of the "$150 million of value that has been created for Rubicon shareholders" since March last year.

The cost to Rubicon accrued every six months and was factored into the company's reported results. Rubicon also said it would respond next week to a letter sent to its shareholders by GPG, in which GPG urged shareholders to accept its 75c-a-share takeover offer and disputed valuations of the company in a Grant Samuel report that recommended against accepting GPG's offer.

The Grant Samuel report values Rubicon at 98c to $1.28 a share.

GPG's offer has drawn few takers, with acceptances giving it 21.07 per cent of Rubicon from 19.99 per cent before the takeover.