Morale at Redflex Traffic Systems, the Australian photo enforcement company with more contracts in the United States than any other firm, has never been lower. Yesterday, the company faced the real possibility that the state government in Victoria, Australia would sue for the recovery of $15 million in citations issued by a faulty Redflex freeway speed camera system. Although the government currently refuses to issue refunds, it issued equally stern denials before giving in to public pressure by refunding $26 million worth of tickets over a high-profile accuracy failure in 2003.

The latest bad news comes as employees in the US office fear layoffs in the wake of the cancellation of the multimillion-dollar Arizona freeway photo radar program. Some workers at the company have privately expressed anger that, despite firm's precarious financial state, the head of US operations will receive a substantial raise. Shareholders are no more likely to be pleased to learn at the November 19 annual meeting that Karen Finley will be paid US$498,108 in a year when net profit for shareholders dropped 92.6 percent to a total of just $437,300.

This year, Finley boosted her salary by $9000 to $309,000 in addition to requesting 79,701 shares of stock incentives worth US$189,108. Other company directors can look forward to lavish increases as the annual meeting will vote on increasing the maximum annual payment to company directors from $396,000 to $693,000. Redflex CEO Graham Davie will be paid slightly less than Finley at $496,637-- $310,375 in salary and $186,262 in stock.

In the past five years, that stock has dropped 19 percent compared to a 7 percent gain on the ASX 200 with shares currently trading at just US$2.41 on the Australian Securities Exchange. This poor performance has made the company an attractive buyout target. Toll road giant Macquarie Bank made an offer to buy out the firm, and more recently the German conglomerate Siemens AG has expressed interest.

Shareholders must approve the raises for company directors, the performance rights granted to Finley and Davie and the overall remuneration report.