Desperate Domain to wield axe

Domain is poised to slash salaries and jobs in drastic measures put to staff to help stem the revenue loss caused by COVID-19.

Domain chief executive Jason Pellegrino

Domain is poised to significantly reduce salaries and make job cuts in drastic measures put to staff to help stem the financial bleeding in the real estate sector caused by COVID-19.

The Australian has obtained a document sent to staff of the Nine Entertainment controlled Domain following a virtual meeting with management last week outlining three options for the company to cope with the dramatic impact of the coronavirus outbreak, with a vote on the plan as early Monday.

“Plan A” presented to staff involves reducing hours by 20 per cent, with the reduction in pay transferred to share rights.

Domain staff will have to wait 18 months to exercise the share rights as they will only be available by November 2021.

Staff will be given the shares at their price in November 2021 and would be able to sell them immediately rather than having to hold them for three years

“Plan B” put to staff was to reduce all staff pay by 20 per cent and no share right issue.

“Plan C” – seemingly the least attractive – would be staff stand-downs, which The Australian understands would involve suspensions or redundancies of up to 30 per cent of staff. Although the offer is being put to Domain staff in terms of a choice, in reality the company needs staff to accept Plan A by an overwhelming majority of up to 98 per cent for approval under the EBA, which some editorial staff at Domain are employed under.

As part of the preferred Plan A package, the board of directors — which includes Nine chief executive Hugh Marks — will take a 50 per cent pay cut, and the executive leadership team will take a 30 per cent cut. Staff earning more than $180,000 will take a 25 per cent cut and staff earning between $65,000 and $180,000 will take a 20 per cent cut.

Domain staff were told at a meeting last Wednesday that they would have to vote on their preferred option by April 20, with management understood to be increasingly concerned about cashflow at the Nine-controlled business. According to its half-yearly results, in December ­Domain had $14.2m cash in the bank.

Despite some concerns about cashflow at Domain, it is understood the company has a $225m facility that it can draw upon; the facility was finalised in November.

In a trading update last month Domain noted the impact of COVID-19 had brought a halt to house inspections and live auctions, forcing a major reductions in real estate advertising.

“There is uncertainty about the potential impact of COVID-19 on the Australian property market,” the company said. “We have implemented business continuity plans and they are working well.”

Domain’s revenue has taken a battering as of late, with print products cancelled and listings collapsing as a result of COVID-19 crisis. Late last month Nine announced that to save money it would be cutting a series of sections, including the Domain liftout. Nine also announced a cost reduction program worth $200m.

A spokeswoman for Domain said that “like many other companies, Domain is exploring all avenues to navigate through COVID-19”.

“We are taking our time to find the best pathway forward and to get this right and are exploring innovative options, in conjunction with our staff, that best meet the needs of our business and our partners.”

The current situation also increases pressure on Domain chief executive Jason Pellegrino, who is believed to be out of favour with Mr Marks for what is perceived as underperformance of the business prior to the crisis.

Domain was considered to be the crown jewel in the former Fairfax empire when Nine took over in 2018, but its share price has slumped to $2.32 amid the coronavirus crisis. This is down off a high of almost $4 earlier this year and $3.80 when it floated on the ASX in late 2017.