IAWS proposes bonus scheme for executives

Agri-business group IAWS is proposing to introduce an executive bonus scheme with the potential to double the salaries paid to managers benefiting from the scheme.

The company intends to ask shareholders to approve the scheme, which promises bonuses worth between 35 per cent and 115 per cent of executives' basic salaries, at its annual general meeting (a.g.m.) at the end of next month.

The bonuses will be paid in the form of shares purchased by a trust on the executives' behalf on the open market. They will be conditional on cumulative earnings per share growth reaching certain targets every year over the five-year period of the scheme, which will run from August 1st, 2004.

The base for the calculation of earnings growth will be the fully diluted earnings per share for the year that ends on July 31st, 2004, before amortisation and exceptionals.

According to a document sent to shareholders this month along with the IAWS annual report and a.g.m. notice, the participating executives will not be paid if earnings per share grows less than 10 per cent.

They will receive shares worth 35 per cent of their salaries if earnings per share grow by between 10 per cent and 10.5 per cent, and up to 115 per cent of their salaries if it tops 21 per cent. The awards will be calculated according to the executives' basic salary.

Under the scheme's terms, the trust will hold the shares for the executives' benefit for between three years and one month and five years.

The document states that participants run the risk of losing their entitlements for a given year if they do not continue working for the group for a further three to five years. However, the board will have the ultimate discretion to waive this condition.

The company can also reduce other performance-based payments by the amount earned under the bonus scheme.

Its remuneration committee will also be charged with limiting the annual cost of the plan to ensure that it does not exceed 2.5 per cent of total yearly operating profit.

The committee has yet to decide exactly which executives will be eligible to benefit under the scheme.

The notice to shareholders states that the company wants to introduce the scheme to "retain and incentivise senior executives of the group and in certain cases to recruit senior executives to the group".

IAWS's annual report shows that the company paid its chief executive Mr Owen Killian €997,000 in salary, bonuses and other benefits in the year to July 31st last.