Top officials at Woodbridge, Ontario-based Royal Group Technologies Ltd. will have their 2002 bonuses changed after reviews by a corporate compensation board and an outside consulting firm.
Vic De Zen, chairman and chief executive officer, and President Doug Dunsmuir each will have his 2002 bonus reduced after shareholders demanded a rationale for the figures earlier this year in the face of missed earnings expectations and declining stock value.
De Zen's bonus for 2002 will be reduced to C$3.8 million (US$2.4 million), vs. C$5.6 million (US$3.7 million). Dunsmuir's bonus will be reduced to C$2.2 million (US$1.4 million), vs. C$3.2 million (US$2.1 million).
The new compensation structure also means that each official's base salary will increase. For 2003, salaries for De Zen and Dunsmuir have been set at C$900,000 (US$640,000). That compares with a 2002 salary of C$358,000 (US$236,000) for Dunsmuir and a salary of C$500,000 (US$329,000) for De Zen.
Historically, the company had based bonuses on earnings before interest, taxes, depreciation and amortization, officials said in a news release. But the board decided to revise Royal's existing salary structure and replace its bonus program with one based on return on invested capital - something more appropriate to the current scale of Royal's business, officials said.
``Management, the board and the compensation committee agree that improving return on invested capital typically results in better share prices for companies at the same stage as Royal,'' said Mark Badger, vice president of corporate communications. He said the new structure better aligns management's interests with that of shareholders.
Officials said the new structure will bring salaries in line with comparable companies, as advised by the compensation consultants. The new bonus program will take effect in fiscal 2004.
Royal Group Technologies will announce its third-quarter results July 31.