We haven’t had a Crikey list for a while so with the annual report and AGM season fast approaching it is time to assemble the great CEO options play list.
Anyway, back to the options list, let’s start with the “if only” club. If only these CEOs could have retired early and cashed in their options at the top of the market they’d each be worth more than $5 million.
Paul Batchelor: should have been fired after the GIO debacle but got the top job when George Trumbull was sacked and with it came 1.27 million options at the knockdown price of $15.83. With AMP shares now around $13.35, Batch is actually $3 million out of the money but in July 2001 AMP hit $22 and Batch was $7.8 million in front on paper. Shame he couldn’t exercise and sell then.
Malcolm Broomhead: When Malcolm was appointed CEO of troubled chemical giant Orica last year, he picked up two million shares at $4.50 with an interest free loan from the company. Since sacking 800 staff and selling off a few divisions and the $13 million art collection, Orica shares have rocketed to $9 and Malcolm is already a tidy $6.7 million in front.
John Fletcher: Brambles market cap fell by $1 billion when he quit and Coles Myer rose by the same amount when he joined but this has not translated into options profit because Fletch picked up 2.5 million options at $6.33 which are now $1.2 million out of the money as Coles wallows below $6. If only Fletch could have retired, exercised and sold his shares in March this year when Coles hit $8.80 he could have crystallised a $6.2 million profit.
Professor Fred Hilmer: The Fairfax CEO has 3.5 million options at $2.85 with no hurdles. When Fairfax shares hit a peak of $6.20 in March 2000 as it contemplated spinning off F2 during the peak of the dotcom boom, Fred was almost $12 million in front on paper. But it’s only paper because Fairfax shares have dipped close to $3 so Fred is only $600,000 in front on his options as he comes to the end of his contract. It shouldn’t be renewed.
Gail Kelly: The new St George Bank CEO is typically over-rewarded for a banker. She only started in January this year but her 1 million options will be priced at about $17 and with the stock currently at $19 she’s already $2 million in front and was $3.5 million in front at the peak when the stock hit $20.50 in June. With St George’s anti-takeover provisions coming off she’ll be keen to sell the bank and make a killing. The board have also demonstrated typical banking greed with an increase in non-executive director’s fees from $800,000 to $1.2 million. Remember the days under Jim Sweeney when this was a friendly building society. Now they are a fully fledged member of the rapacious banking cartel gouging their customers all over the place and excessively rewarding directors and senior management.
Tom Park: After making almost $10 million out of his Southcorp options, the new Goodman Fielder CEO has backed up for another profitable tilt with 3 million GMF options exercisable at $1.27. However, he has to get the share price up to $1.70, $1.90 and $2.10 respectively for each one million options to be exercised. At the moment the stock is at $1.70 so he would get the first one million and enjoy a profit of $530,00 if it all ended now.
Peter Smedley: You can’t feel too sorry for the Mayne CEO because he walked out of Colonial after the ComBank takeover with an outrageous package worth about $25 million. However, he went back in for another crack at Mayne and borrowed from the company to buy 2 million shares at $2.93. When the stock hit $7.50 on Oct 26 last year, he was $9.14 million in front. Mayne shares are now down around $3.70 so he’s less than $2 million in front these days.
We’ll give a free sub to anyone who can come up with two more examples of existing CEO options plays submitted in the same form as above.