City: Over the top

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The Independent Online
Archie Norman is a clever, capable businessman who clearly knows what he's doing and deserves to be paid well for his pains. He has made a good fist of converting Asda from a dying leviathan into a relatively healthy retailer. Shopping there is no longer quite the equivalent of going on holiday to Benidorm.

Does that, however, merit turning him into a multi-millionaire in the next few years? You have to wonder, as some of Asda's shareholders were wondering last week when they saw the details of the company's executive incentive scheme. Norman gets options over 2 million shares excercisable at a nominal sum - which I understand to be 0.1p - in 1996 and 1997. The only conditions are that earnings per share growth must be equivalent to 15 per cent a year by then and that the share price must be pounds 1 or over. (Four other executives get options over 1 million shares on the same terms.)

These, you might think, are not particularly difficult targets. And you'd be right. The share price is 60p, having touched a high of 77.5p already this year. Unless the economy collapses and the stock market follows suit, it is hard to imagine how the shares could not be over pounds 1 by the end of 1997. And despite Norman's protestations that food retailing is a saturated market, 15 per cent a year growth should not be hard to achieve from a base as low as Asda's.

But even these incentives are, of course, paltry compared with the deal handed out to the four main directors of Cray Electronics. If pounds 40m isn't incentive enough for anyone, I'm not sure what is.

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