Absa executives score R1.7bn
May 16, 2005
By Ann Crotty
Johannesburg - Senior management and executives of Absa have scored to the tune of a massive R1.7 billion thanks to Barclays` R82.50 a share bid for the local bank.
The R1.7 billion represents the profit that the beneficiaries of Absa`s share incentive trust stand to make from the share options they have been allocated.
The profit reflects the difference between the price at which the options were allocated to management and executives, and the current share price.
Yet the main factor that has pushed the Absa share price to an all-time high is not the performance of management but the announcement of details of Barclays` bid.
On Friday the shares rose as high as R82.98 before closing 15c down on the day at R82.75. The banking sector fell 0.45 percent.
The really good news for management is that about R453 million of this windfall can be pocketed immediately, as 7.9 million of the 34 million options that have been allocated are currently exercisable.
The group`s 2004 annual report reveals that these options were allocated between 1995 and 2000 at prices from R11 to R30.
In addition, there are 26 million options that can be exercised over the next four years. These options were allocated at between R26 and R36 each and are therefore `in the money` to the tune of R1.2 billion.
Although there are an estimated 3 000 beneficiaries of the share incentive trust, it is likely that a handful of senior executives of the bank are the major beneficiaries.
However, shareholders will have to wait until the release of the group`s 2005 annual report in a few weeks to establish the extent to which the top three executives of Absa will benefit from the Barclays bid.
The company only has to disclose individual details of the remuneration packages of the main board members. Absa`s three executive directors - Steve Booysen, Jacques Schindenhutte and Louis van Zeuner - took up their board positions in financial 2005 and so the details of their option allocations were not included in the 2004 annual report.
An Absa spokesperson said on Friday that 614 000 options were granted to the three over the past 18 months at an average price of R48.
The 2005 annual report will also reveal the extent to which the 7.9 million options may have been exercised during the past year as beneficiaries decided to take advantage of the strong run in the Absa share price.
The 2004 annual report discloses the remuneration details of the three former executive directors - Nallie Bosman, Frans du Toit and Rupert Pardoe. At the end of March last year Bosman had 1.1 million options, which had been allocated between 1994 and 2003 at prices between R11 and R35. Pardoe had 730 000 options and Du Toit had 378 000.
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