GraceKennedy Limited has circulated a resolution among shareholders that, if approved, at next week's annual general meeting will give the company final say over the stock option plan for senior staff and directors.

The conglomerate wants to end the practice of having shareholders sign off on the stock option plan at the annual meetings and vest the authority solely in the 13-member board.

Stock options form part of the compensation scheme for directors, managers and other full-time employees.

GK chairman and CEO, Douglas Orane, said, if the resolution is approved, it would mean the automatic rollover of shares in stock plans.

"The shares that have been offered over the decades, in some cases have been substantially taken up, so one requires to have a new scheme in order to get new shares that we can then offer to directors, managers and employees," said Orane.

"The previous schemes were of the nature where, say you are applying for eight million shares for a scheme and over time, as they are issued and the options exercised, that eight million will go down to zero, then we would have to go back to the shareholders and say we need a new scheme and when it gets depleted we go back again," he explained.

With the vote being sought, the scheme will automatically replenish itself, the GraceKennedy boss said.

Plan being proposed

Under the 2009 stock option plan being proposed, the total number of shares available for grant would not exceed 7.5 per cent of the issued share capital of the company and options under the plan would be determined by the board.

GraceKennedy says the basis for granting options to executive directors, managers and employees would be determined by level of responsibility, potential value creation for the company, and the need to attract and maintain the best talent.

"GraceKennedy believes in world-class compensation methods that include using stock options to incentivise our people. What it does is to align the interest of our employees with that of the shareholders," Orane told the Financial Gleaner.

The conglomerate, with turnover of $53.4 billion last year, wants to continue the longstanding tradition that dates back to 1925, when the first shares were sold to employees of the company by the then founders, the Graces, the Kennedys and the Moss-Solomon family.

"In order to prepare for that, one needs to have a constant supply of shares available for application to specific individuals who we see are important in particular functions for the future growth of the company," he noted.

GraceKennedy's last stock option in 2008 saw the company issuing 1.947 million shares valued at $66 million to its employees.

With after-tax profits tumbling 32 per cent to $2.4 billion last year, earnings per share dropped to $6.98 from $10.55 in 2007.

GK has 331.2 million shares in issue which last traded at $50.

sabrina.gordon@gleanerjm.com