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While businesses all over the country are standing down staff to keep costs at bay during the Covid-19 crisis, real estate listings company Domain (ASX: DHG) is taking a different approach.
The Nine Entertainment-owned group is offering staff the option to either cut back their working hours or receive part of their salary in share rights over the next six months.
Domain CEO Jason Pellegrino (pictured) says the plan has been overwhelmingly supported by employees, with more than 90 per cent of staff opting into the program known as 'Project Zipline'.
The project has the potential to cut Domain's total costs by around 9 per cent, given the majority of staff are shifting 20 per cent of their salaries to the share plan and salaries tend to make up almost half of the company's cost base.
The group's leadership team has elected to take a higher percentage of payment in share rights, with 30 per cent for executive leaders and 50 per cent for Pellegrino and the board.
"There are many unknowns with COVID-19, however, as a leadership team it is our responsibility to set Domain up to deal with the widest range of scenarios possible, while protecting our most important assets - our people and capacity to deliver innovative product solutions at pace," says Pellegrino.
"With this in mind, we believe Project Zipline not only sets Domain up to deal with what lies ahead, but also positions the business well to capitalise on increasing demand for digital transformation across our industry, and to accelerate as listings return.
"It also provides our employees with the opportunity to invest in Domain and participate as "owners" as listings return. Our shareholders and customers also benefit from this approach, as it strengthens Domain's key assets and our ability to retain and attract talent and deliver."
The company has also negotiated a new debt facility of $80 million, adding to $225 million in facilities announced last year.
"In a time of rapid digital transformation, the employee program and additional debt facility provide Domain with flexibility to maintain the pace of our business model evolution, while remaining well positioned to trade through the wide range of potential market scenarios that lie ahead," he says.
With adjustments for divestments, trading was up 1 per cent for Domain in the March quarter, and 10 per cent in March itself with a recovery of new listings in key markets.
Residential depth yield increased 17 per cent for the month, benefiting from the positive impact of Domain's new flexible pricing model, and increased depth penetration across all states.
However, the company notes April listing volumes are reflecting impacts from Covid-19.
Updated at 11:50am AEST on 27 April 2020.
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