Laura Ashley chief's share options surge

Laura Ashley, the troubled frocks and furniture group, yesterday spent the equivalent of 80 per cent of its half-year profits of pounds 3m on buying shares to finance part of the share options package granted to Ann Iverson, the recently appointed chief executive.

The number of share options granted to Mrs Iverson has also been increased by 2 million to 5.5 million, and James Walsh, finance director, has also been awarded 1,172,998 options.

The company is already showing a paper loss on the shares bought yesterday of pounds 218,473. Some 1,986,122 shares were bought at 120p, which compares with the 109p price at which Mrs Iverson, former head of Mothercare and Kay-Bee Toys in the US, can exercise the options. Shares were purchased through the Laura Ashley Employee Share Ownership Trust, whose principal beneficiaries are employees of the Laura Ashley group.

A company spokesman dismissed suggestions, however, that employees were subsidising Mrs Iverson's options. He said the company had funded the trust's share purchase, and "any loss will be borne by the company."

The total number of options granted to Mrs Iverson has been increased from 3.5 million to 5.6 million, the spokesman said, due to the sharp rise in Laura Ashley's share price from 75p since she joined the group. Shares closed 3p higher yesterday at 120p.

Half of the 5.6 million options can be exercised within three to five years time only if the company declares more than a nominal dividend. Another 25 per cent can be exercised only if the share price hits 150p and annual profits reach pounds 25m in three years, and the remainder if the share price tops 200p and profits exceed pounds 35m.

"These are tough long-term performance targets. This is not a one-way bet," said the spokesman.