The change will lead to a charge of pounds 63m against Boots' profits in the current year with an expected charge of pounds 20m a year thereafter. Boots said the arrangement would avoid the dilution of existing shareholders and help towards a more efficient capital structure.
"As far as we can see we are the first UK company to account for employee options in this way," a Boots spokesman said. Boots has already undertaken pounds 800m of share buy-backs in the past few years and paid a pounds 400m special dividend. Boots shares rose 32.5p to 926.5p on the news.
Under the terms of the new arrangement, Boots has set up a qualifying employee share ownership trust (Quest) connected with its SAYE share option scheme for staff members. Boots will buy existing shares for the staff trust and charge the difference between the option price and the actual price to its profit and loss account. This reduces the number of shares in circulation and thereby increases earnings. Boots has granted SAYE options on 18.3 million shares at prices ranging from 310p to 808p.
Accountants said the move might put pressure on other companies to follow suit.
SG Securities retail analyst Ashley Thomas repeated his "buy" recommendation on Boots and said: "The Quest scheme demonstrates Boots' further commitment to delivering shareholder value."
Outlook, page 19