Brumby’s bakery franchise shares

Senior management of the Brumby’s franchise will be allocated 300,000 share options after a vote of the company’s board of directors aimed at locking in the senior management team for the next three-and-a-half to five years.

The 11 senior managers will each receive an average of about 29,000 share options at a price of $1.25 per share, $0.05 above the listed share price at the time of the announcement of $1.20. Brumby’s shares have traded as high as $1.30 after listing on the Bendigo Stock Exchange in December 2003 at $0.56.

The managers will not be able to exercise their share options for three-and-half years, and will then have 18 months to exercise the option. The 300,000 options represent approximately 2.5 percent of the issued share capital of the company, which has 300 stores in Australia and New Zealand.

Brumby’s managing director, Michael Sherlock, says the share options provide a “golden handcuff” to ensure the franchise maintains its current management team as the company investigates expansion in Asia and the Pacific and the rollout of its new concept store, Brumby’s GO!.

“The issue of the options will provide appropriate incentive for management to maximise the return to shareholders over the long-term and assist in developing a unity of purpose for both

Brumby’s management and shareholders,” he says, adding that the share options form the last significant piece in a human resources strategy based on reaching specific targets.

Meanwhile, Sherlock is also calling on non-supermarket retailers to cut the use of lightweight plastic bags.

Pressure is building for a nationwide ban with South Australia Premier Mike Rann warning his state will “go it alone” and ban plastic bags from 2009 if a Australia-wide ban cannot be achieved.

While major supermarket groups have reduced the number of bags issued by 26.9 percent, a survey of 129 non-supermarket retailers has found that 47 percent have not heard of the target of a 50 percent reduction in plastic bag use by the end of this year.

According to Sherlock, raising awareness among all retailers has been identified as the key to cutting plastic bag use. The bakery franchise was a pioneer in the introduction of reusable bags in the mid-90s.

“Our original ‘enviro’ bag has been very successful in both the Australian and New Zealand markets. Our objective, of course, is to reduce the use of plastic bags and we reward shoppers who use the environmentally friendly bags. All smaller retailers could benefit from cutting their use of plastic bags and providing an alternative so that they present a greener image to customers, while helping the environment,” he says.

Sherlock says that based on feedback from customers, Brumby’s ‘enviro’ bag has now been improved by being made larger with longer handles.