Shareholders in Barlo Group have voted to scrap a year-old management incentive scheme linked to the company's poorly performing share price and replace it with one based on profits. Under the new scheme, Mr Tony Mullins, the chief executive of the building materials group and four other senior executives will now get bonuses equivalent to 80 per cent of their basic salary in respect of last year. The bonus payments will be paid in Barlo shares that will be held by the company for three years before being given to the executives provided the company's profits during the period meet agreed targets.
Mr Mullins and three other executive directors, including Mr John Bourke, the finance director, were paid a total of £737,000 (€935,797) last year - an average of £184,000 each.
The scheme will operate on a rolling basis with new bonus shares being allocated every year and vested with the directors three years later, provided they meet their profit targets. From next year the allocations will be capped at around 27 per cent of salary.
The executive directors who will benefit from the new scheme apart from Mr Mullins are Mr Henry Morris, head of the radiators division; Mr Brian Beausang, corporate development director; Mr Andre De Smet, managing director of the plastics division; and Mr John Bourke, group finance director. Other executives will also participate.
Barlo chairman Mr Niall Carroll said the changes were needed to the year-old scheme to make it "more effective in attracting and retaining executives". He said the scheme was probably the first of its type in Ireland and modelled on similar schemes in Britain. It had been approved by the Irish Association of Investment Managers, said Mr Carroll.
The motion to introduce the scheme was carried at an e.g.m. in Dublin yesterday with the help of proxies totalling almost 49 per cent of the shares. A handful of shareholders attended and no questions were raised.
Barlo's share price has fallen steadily over the last three years from a high of €1.27 and fell two cents yesterday to 87 cents. Under the previous scheme, which was based on the more orthodox concept of Total Shareholder Return, the executives only received shares if the company's share price met various targets.
Mr Carroll said yesterday that the management had no plans to take the company private or take any other radical action in response to the poor performance of the share price. "We leave it to the stock market when they want to buy our shares. They are good value," he said. Barlo had recently been reclassified on the London Stock Exchange as a building materials group and the management's strategy was to build it up into a mid-sized group within this sector, said Mr Carroll. This should improve liquidity in the shares, he said.
Barlo maintains the scheme still involves an incentive for management to work to improve the share price as the bonus payments will be in the form of shares.
