National Australia Bank will buck the trend of this year's annual meetings
by seeking to award managing director Frank Cicutto up to 300,000 fresh
options, adding to the $72 million worth of options already held by executives
at the bank.
Rivals Westpac, ANZ and St George are not seeking any new option or share
grants at their upcoming annual meetings, while Commonwealth Bank has said it
will no longer issue options in response to corporate governance concerns.
According to the notice for the December 19 annual meeting, NAB said it
wanted to issue a mixture of options and share rights to Mr Cicutto to provide
``continuing emphasis on equity alignment between executives and shareholders".
Under the new policy Mr Cicutto will also receive, if shareholders approve,
up to 100,000 performance share rights.
NAB argues the new policy maintains ``rewards at an appropriate level to
attract, reward and retain our executives".
However, Mr Cicutto already holds 1.4 million options, including 500,000
granted to him since the last annual meeting with an exercise price of $27.85.
NAB shares closed 67c weaker at $32.50 after going ex-dividend, putting
those options clearly in the money should the hurdles be achieved.
Hurdles for the latest set of options are that NAB's total return must exceed
at least 50 per cent of other top 50 companies, with half still exercisable if
NAB performance only beats half the peers and the amount exercisable rising
progressively from then on.
According to figures disclosed to analysts earlier this month, the total fair
value of options and employee shares stands at $124.3 million or 2 per cent of
annual operating expenses. That figure is up almost $20 million on a year ago
and includes $72 million for options.
NAB does not have to expense this cost against profits, but will likely
amortise the cost of new issues as new international accounting standards come
in over the next two to three years.
The annual report due next week will include details of the halved bonuses
NAB promised that senior executives would get after an investor outcry in the
wake of last year's $4 billion in losses from the acquisition of US mortgage
servicing operation HomeSide.
Earlier this month NAB reported a net profit of $3.37 billion, up from the
depressed $2.08 billion reported in 2001. The notice of meeting also include a
similar resolution inserted by the Wilderness Society to that proposed at the
CBA annual meeting.
The society wants to prevent the bank from having business dealings with old
growth logging companies, but directors recommend shareholders vote against the