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Directors grilled over scheme

Shakeman Mugari

THERE is a growing trend in the market for shareholders of listed companies to become increasingly sceptical about share option schemes awarded to executive management.

That is mainly because shareholders believe share options could be a means of self-enrichment by directors and executive managers of listed firms.

This week some Dawn Properties shareholders tried desperately to block a proposed share option scheme for the company’s executive directors.

The shareholders also grilled the directors during the annual general meeting (AGM).

Some shareholders at the AGM held on Tuesday were so angry that they dressed down the company chairman Farai Rwodzi and his directors.

The row began when one of the shareholders said he felt that the shares to be allocated to the directors were a “bit too much”.

“I definitely disagree with that scheme. Definitely! There is a worldwide trend against share options,” said an angry shareholder.

“What do we pay you for? It’s not about incentives, let’s call it self-enrichment. Incentives for what? There are many people who can do the same job you are doing right now,” the shareholder fumed.

The company was proposing that the directors grant options to executive management in full employment up to a maximum of 73 500 000 linked units.

This is about 10% for just two executive directors from a company that had a turnover of $1,4 billion in the first nine months of operation.

It was felt that the figure was exorbitant for a company whose properties are currently heavily undervalued.

One of the directors, prominent lawyer Edwin Manikai tried to defend the scheme arguing that it was in line with other listed firms.

He said the board had conducted a survey to find out what other companies were offering directors under their options.

But the shareholders would hear none of it.

They argued that the number of shares and their monetary value were “a bit overboard”. In the end the resolution was passed after a narrow vote in its favour.

Share option schemes are used by companies the world over as an incentive to executive directors.

In Zimbabwe they have, however, become increasingly unpopular especially after the Capital Alliance scandal hit First Mutual early this year.

The saga later dragged in Royal Bank, which is now under curatorship.

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