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Executives at Failing Australian Toll Road Company Split Lavish Salaries
BrisConnections toll road stock fell to one-tenth of a cent, yet top six executives rewarded selves with an average of $370,000.

A public company that allows its stock price to drop to A$0.001 per share is not normally considered successful, but the management of the BrisConnections toll road company are being rewarded as if its shares had never traded at bargain-basement prices. In fact, investors reading the Annual Report released yesterday would have no reason to suspect the company had ever been on the brink of collapse.

"I am pleased to report that the Group has successfully tackled a number of early challenges, including establishing our organization, holding two member requisitioned meetings, forging solid relationships with project stakeholders, and working with our project partners to ensure a positive start to construction of the Airport Link Project," BrisConnections Chairman Trevor C. Rowe wrote in the report's introduction. "BrisConnections is fully funded and we are well positioned to continue delivering on the construction phase of the project. We have syndicated debt facilities in place to 2018, which we began drawing on in November 2008."

The enthusiastic prose set the stage for the enthusiastic compensation packages bestowed upon the company's top executives for the fiscal year ending June 30. The bonus figure below includes the value of stock options awarded, retirement contributions and other monetary incentives.

Ray Wilson$398,713$271,009$669,722
Nicholas Lattimore$263,626$193,101$456,727
Charles MacDonald$240,826$116,674$357,500
Trevor Rowe$104,478$204,267$308,745
TD Herbst$187,250$93,613$280,863
Robert Porter$115,896$44,271$160,167

BrisConnections was created to develop the A$4.8 billion Airport Link toll road in Brisbane, Australia using highly leveraged shareholder debt. By their nature, the financial health of toll roads can swing wildly based on minor changes in the number of people using the road or in the interest rate used to finance the billions in debt used for construction.

"If Traffic assumptions over the entire concession period differed by +/- 5 percent then the value in use would be impacted by +/- $100 million," the annual report explained. "The value in use is also sensitive to changes in the discount rate. For example, 50 basis point change in discount rate will impact the value in use by +/- $200 million."

After the credit crisis hit both interest rates and traffic levels worldwide, BrisConnections stock plunged. Worse, the company created an unusual "stapled security" arrangement where each share came with a debt of $2 to be paid in $1 installments. Many small investors and housewives unaware of this obligation were horrified to learn that each $100 they invested in the bargain stock had become a $200,000 debt. An attempt by shareholders to wind up BrisConnections failed when a $4.5 million greenmail payment was made to the largest rogue investor. The stock no longer trades on the Australian Securities Exchange.

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