GPG – The gravy train just keeps rolling on

April 18

GPG’s gravy train just keeps on rolling with the recent issue of a further 4.15 million options to directors.  The five directors now have 57.7 million options between them with Sir Ron Brierley having 2.9 million, Graeme Cureton 13.4 million, Tony Gibbs 13.8 million, Blake Nixon 13.1 million and Gary Weiss 14.5 million.

GPG operates like socialist parties as all of the directors, with the exception of Sir Ron, are issued the same amount of options at each granting date

GPG’s share option scheme – How can we participate?

Year	Issued to directors
2008 to date	4,150,000
2007	4,250,000
2006	2,550,000
2005	10,550,000
2004	5,200,000
2003	None
2002	None
2001	3,650,000

GPG’s share option scheme, which expires in 2012, was approved by Brunel shareholders at an extraordinary general meeting just prior to the 2002 Brunel/GPG merger. Thus GPG shareholders have not approved this exceptionally generous scheme, which runs for a further four years.

Details of the scheme were included in a highly technical 226-page merger document.  The report stated that “when granting options, the board should specify objective conditions by way of performance targets, to be satisfied before options may be exercised”. There is no evidence of any public statements regarding the targets executives have to achieve to be granted these options.

Previous GPG options schemes had performance hurdles but under the 2002 scheme the exercise price is determined by the board but may not be less than:
- the higher of the nominal value of the shares (5 pence) and
- the middle market price per share on the last dealing date before the options are granted.

The 4.15 million options issued last week have an exercise price of 65.5 pence or $1.63 at the latest exchange rate. GPG’s share price closed yesterday at $1.71 and these options are already “in the money” to the tune of $330,000.

GPG’s corporate governance gives serious causes for concern, particularly as the company’s share price performance is lagging behind the major sharemarket indices. The group clearly needs a number of independent directors and to refrain from issuing a huge swag of options without any performance targets.

Brian Gaynor - 18 April 2008