Algoma shareholders approve award plan for directors

Despite opposition from employee/shareholders like plate-mill worker Michael Da Prat (shown), a controversial plan to award directors of Algoma Steel with company stock was approved today.

Under the plan, members of ASI's board of directors who are not full-time officers of the company will be eligible for a monthly grant of shares with a market value of up to $10,000 a month.

That's on top of the regular director's pay, which is $15,000 a year plus $1,000 for each meeting attended and additional payment for serving on committees.

Chairman also eligible for free shares

Board chair Benjamin Duster, an Atlanta-based turnaround specialist who's paid $90,000 a year by ASI, is also eligible for the free shares.

Initially, the size of the awards has been set at $4,500 a month for Duster and $2,000 monthly for other directors.

"This kind of remuneration is intended to promote the outside directors' identification with shareholder interests and to allow the outside directors to participate in the long-term success of the corporation," ASI said in its notice delivered to shareholders prior to today's meeting.

"In order to reach these objectives, the shares should be held as long-term investments," the company circular said.

'We have been betrayed'

But rank-and-file employee/shareholders say they suffered deep cuts to save the company and can't understand why directors should be rewarded.

"We believe we have been betrayed by the executive of this company once again," Da Prat told the meeting.

"The news of the director compensation increases along with the announcement of the creation of an extremely generous share award plan has had catastrophic results in the workplace," Da Prat said.

"Morale is low and we the workers are upset and bitter....The workplace is in no mood to do more with less now."

Cash paid to directors is half what Dofasco and Stelco pay

At today's annual shareholders meeting, Duster defended the award plan, pointing out that ASI directors receive less compensation than their counterparts at any comparable steel firm, and in terms of cash remuneration, receive less than half of what directors at Dofasco and Stelco are paid.

Duster pointed out that of the shares received by directors, 50 percent must be held for at least four months and the other half must be held for at least one year.

As a result, directors will not be able to benefit from the plan unless they improve the company's fortunes over that time, Duster said.

"Algoma's going to have to be successful 12 months out for those shares to have value," he said.

Some prospective directors turned Algoma down

When directors were being sought for Algoma's new board, several prospective candidates declined the job, Duster said.

The new chairman turned to the medical field for a metaphor defending the reward plan.

He compared it to an organ transplant in which the "heart of a champion" is transplanted into Algoma's ailing body.

Such a procedure necessitates "a more expensive regimen, a more expensive diet," Duster told shareholders.

"We understand the pain," he told leery employees. "We also understand that the best way for everyone to feel better is to succeed."

Duster said he has no interest in leading a firm whose sole objective is survival, but he definitely wants to turn Algoma Steel into a winner.

Sandy Adam steps down Aug. 31

In the final moments of today's meeting, president and CEO Alexander (Sandy) Martin announced that he'll retire from the company effective Aug. 31.

To read more about that development, click here.

Under last-minute alterations to the share award plan approved today, Sandy Adam will not be eligible so long as he's employed by the company, but as a new director he'll become eligible as soon as he leaves the company.

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