cml directors greed - crikey's analysis

If you are wondering why the shares have fallen over the last two days Crikey.com.au has some suggestions:

1. EXECUTIVE GREED AT COLES MYER

We've seen some breathtaking executive greed in our time but the Coles
Myer
management team will take some beating based on the figures released in
the
annual report today.

The company tried to take the heat out of the announcement by revealing
the
additional 1.5 million options for CEO John Fletcher yesterday but these
numbers deserve to be up in lights in tomorrow's papers.

Not content with walking out of Brambles with $8.65 million in his final
year, John Fletcher has pocketed $4.34 million in for his efforts in the
year to July 31.

And when you overpay the CEO, the underlings also get bulging pay packets
and Coles Myer has not disappointed with Myer Grace CEO Dawn Robertson
scoring $3.18 million, Kmart's Hani Zayadi $2.94 million, Target's Larry
Davis $2.33 million, outgoing Supermarkets boss Alan Williams $1.95
million
and even Tim Hammon, the head of "corporate and property services" scored
$1.85 million.

The Fletcher package included an estimated $584,667 on his existing 2.5
million options which are already $3.7 million in the money.

This really is a joke. Are Coles Myer really claiming Fletcher doesn't
have
enough incentive when his current deal is the right to buy 2.5 million
shares at $6.33 for a total of $15.825 million?

When you add the additional 1.5 million options, Fletcher will be entitled
to spend about $28 million buying shares which is ridiculous because he
could never afford to take on such a risk and would end up doing one of
those controversial cap and collar deals which his rival at Woolworths
Roger Corbett has done.

Corbett has options to buy a staggering $40 million worth of Woolworths
shares and yesterday explained that he couldn't get finance to exercise
his
latest options conversion, hence the need for the "cap and collar" with
Macquarie Bank.

As a rule of thumb, a CEO should be entitled to buy shares each year which
are broadly equal to the value of salary paid. Anything higher than that
and you get potential conflicts of interest over dividend and capital
management policies as well as the spectre of a CEO dumping stock.

Crikey is going to assemble a list of the largest options play in the
market and expects News Corp COO Peter Chernin will be top of the pops
with
options to buy almost $200 million worth of shares whilst the big bank
CEOs
will be next as they average options over almost $100 million worth of
shares each.

Coles Myer shares fell a further 12c to $7.71 today and combined with
yesterday's 13c drop the stock has lost 25c or 3.15 per cent since news of
the indulgent options issue hit the market.

The silly duffers have given Solly Lew something to target and you can be
assured he'll be voting his 5 per cent stake against the Fletcher
options.

With the ASA already pledging to vote against them, there is a small
chance
that Coles Myer will get rolled and they deserve to as they clearly have
learnt little from the excessive pay packets afforded to Fletcher's
predecessors, Brian Quinn, Peter Bartels and Denis Eck.

end quote.

I hold
regards