Andrew Green, Staff Reporter
Orane ... making the most of share options.
Douglas Orane, chairman and chief executive officer of Grace, Kennedy & Company Limited, acquired 200,000 additional shares in his company and disclosed it to the Jamaica Stock Exchange (JSE) in December.
The disclosure, which was published in the media, created a flurry in corporate Jamaica because it was so unusual. It also showed the practical workings of an executive share option plan.
"We chose to comply with the laws of the country and rules of Jamaica Stock Exchange," Mr. Orane said in an interview. "It is not a voluntary action but is required of all."
REVIEWED POLICIES
The company had reviewed its policies last year and found that JSE rules require that directors, senior managers and their
connected parties reveal their dealings in the company's
securities. He said, "We had not been following it and decided to start as of December."
Kiesa Ansine, Mayberry Investments research analyst, said the move was not the norm for
corporate Jamaica. Companies
generally publish the shareholdings of their executives in their annual reports, which gives a snapshot at a particular point in time, but would not usually publish significant changes on an ongoing basis.
"The information is available at that company's registrar for shareholders," she said. "But to the extent that the company voluntarily chose to publish it, Grace is to be commended."
The move, "embodies their thrust towards responsible corporate citizenship," she said. This is because providing investors with this information about such actions at the senior corporate level may offer an insight into their perspective.
Mr. Orane said the share transactions, which were disclosed about himself, and then about Grace's chief financial officer, Don Wehby, were a result of their exercising their share options rights.
The incentive scheme is offered to 200 senior staff at Grace. Mr. Orane said a total of 1,200 of the company's 1,900 staff members also own shares in the company.
BENEFITS THEM PERSONALLY
A share option offers someone the right to buy a company's shares two to three years in the future at the current market price. The aim is to encourage key
officers to work towards
increasing the value of the
company's shares, as this will benefit them personally along with the general shareholders.
"Since we implemented it about three and a half years ago, shareholder value has gone up nearly four-fold," Mr. Orane said.
The normal practice is for
managers to sell existing shares in order to be able to afford to take advantage of their option rights. "Cash has to come from somewhere," he said.
