Axe falls on Algoma Steel management

Algoma Steel is cutting two of the eight organizational levels that separate Chief Executive Officer Denis Turcotte from the shop floor, the company's annual meeting was told today.

Turcotte (shown addressing shareholders at the Waterfront Holiday Inn) said that the two layers of management to be eliminated will be part of the 600 job cuts announced last week as part of a 90-day market adjustment program.

The bulk of those reductions are expected to be accomplished through attrition, although 100 workers got pink slips last week.

After today's meeting, Turcotte told reporters that excess organizational layers can induce inefficient behaviour.

Companies cannot afford to retain one employee more or less than the correct number needed to do the job, he said.

The president and chief executive officer would not provide an exact number of management positions expected to be cut.

Turcotte also announced that the company's senior executives have agreed to freeze their salaries for the remainder of the year, preventing them from enjoying the one percent rollback that salaried workers will get on June 1 and the six percent hike scheduled for December 1.

The rollbacks to previous wage levels were guaranteed to all employees in ASI's restructuring plan.

New perks for directors, senior managers

Shareholders today agreed to set aside one million common shares of ASI stock to be issued under a restricted share unit award program for senior management and directors.

They also voted to allocate two million common shares for a share option program also benefiting senior managers and directors.

The restricted share unit plan is a short-term incentive program under which participants can earn an annual cash award based on achievement of individual and corporate objectives. Between 25 percent and 50 percent of this award must be accepted in the form of restricted share units that could be converted to common shares after three years.

The share option program is intended to protect Algoma Steel's cash resources by paying a portion of its senior managment compensation in stock options.

Heart of a champion

At last year's annual general meeting, ASI chair Benjamin Duster defended an earlier stock incentive program for directors, comparing it to an organ transplant in which the "heart of a champion" would be transplanted into Algoma Steel's ailing body.

Such a procedure necessitates "a more expensive regimen, a more expensive diet," Duster told shareholders last year, adding: "We understand the pain. We also understand that the best way for everyone to feel better is to succeed."

Today, SooToday News asked Duster whether the company had become a champion yet, and if so, whether its performance over the past year warranted a gold, silver or bronze medal.

The ASI chairman responded that his company has indeed been transformed into a champion, with the recruitment of key personnel including Turcotte.

But Duster declined to award ASI any medals for the past four quarters. "This is not an easy industry. It's one of the most competitive industries globally," he said.

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