news?, page-48

Can someone give me a clear definition and a reason for "a short-term incentive" to someone who just resigned?

4.7M +1.2M = 1.2M = about 2% if DOW was to do a capital raise of say 400M

And that is NOT all!

The new CEO surely will be getting some "short-term incentives" too!




Downer missing the train
MATT O'SULLIVAN
August 3, 2010

INVESTORS have reacted cautiously to Downer EDI ejecting its second chief executive in three years, as the company tries to restore credibility over its handling of the biggest rail contract in New South Wales.

Downer's decision to replace Geoff Knox (pictured) with its chief financial officer of just 10 months, Grant Fenn, has also failed to silence calls for board renewal.

Shares in the engineering company slumped by 6 per cent, or 31, to $4.66 yesterday despite a market rally, making it the biggest loser among the top 200 companies.

The company has been beset by operational and financial concerns relating to the $8 billion contract for Sydney's next generation of trains. Downer is leading the Reliance Rail consortium, which won the tender three years ago to deliver 600-odd rail cars to Railcorp. Almost $542 million has been wiped from Downer's market value since June 1, when it revealed $190 million in cost blowouts on the Waratah trains project and $70 million of other write-downs.

It steered clear of giving guarantees that it would deliver the first train set by the end of this year, but Mr Fenn said it was ''working very hard towards it [and] it is very much our focus''. The original delivery date for the first set was April this year.

There has been repeated speculation that Downer will have to pursue a capital raising of up to $400 million to improve its credit rating.

Analysts have also said Downer could be forced to make further write-downs on the Reliance Rail project.

''I don't think the change in the man at the top is going to make too much of an impact. It's a big company and the issues that were there previously haven't changed,'' one analyst said.

But Mr Fenn, who spent 13 years with Qantas, said that Downer had ''no current intentions'' to raise equity, and he insisted that his appointment was not a precursor to further bad news.

''The company has ample liquidity both in cash and undrawn facilities. Our view is that we don't need to raise equity and we also have a view that our share price is undervalued,'' he said.

Mr Knox's departure comes almost three years to the day since he replaced Stephen Gillies as chief executive, after Downer suffered its second consecutive profit downgrade in a year.

Under his ''termination agreement'', Mr Knox will be paid almost $4.8 million in cash - including a short-term incentive of $1,275,000 - and be eligible for 243,000 shares which are due to vest on December 31.

A spokesman for Downer said Mr Knox tendered his resignation on Friday after he and the board agreed that it was ''in the best interests of Downer that he resign''. Mr Knox does not have another job to go to.

Kevin Fletcher, who worked alongside Mr Fenn at Qantas, has been appointed acting CFO. He has been deputy CFO since February.