Executives' golden parachute

18 February 2005

Johannesburg – The three former
senior executive directors of Absa stand to gain up to R78.5 million if
the proposed acquisition by Barclays goes ahead at a price of R68 a

The R78.5 million figure represents the combined value of the
options held by former chief executive Nallie Bosman as well as Frans
du Toit and Rupert Pardoe if there was a change of control at Absa at
R68 a share.

It excludes the price the executives will have to
pay for the options but it does not include a calculation for any cost
to the executives relating to the early exercising of the options.
The single largest beneficiary will be Bosman, who had 1.1 million share options at the end of March 2004.

options were granted at between R11 and R35. For Bosman, the options
granted in 1994, 1998, 1999 and 2000 are the most valuable because they
were at the comparatively low prices that prevailed back then and are
nearer to the date at which they can be taken up by Bosman.

remuneration committee became much more generous after 2000 and issued
substantially larger blocks of options to the executives.

As a result, the larger portion of Bosman's options, equivalent to 715 000, was allocated in 2001, 2002 and 2003.

were allocated at an average price of around R33 each, which means that
at a R68 acquisition price from Barclays they are showing a profit of
R35 each, equivalent to a total of R25 million.

It is unclear at
this stage precisely what will happen to Absa's share option scheme in
the event of a deal with Barclays, but generally in transactions of
this nature, the scheme has to be fundamentally restructured and the
participants are allowed to take early delivery of their existing

A spokesperson from Absa would not comment on the issue.
most notable recent example of the early payout of a share option
scheme was that of Johnnic Holdings ahead of the unbundling of the MTN

This transaction had dramatic implications for the
value of the existing Johnnic options and so the participants were
allowed to take early delivery of their options.

Johnnic's 2004
annual report revealed that former chief executive Jacob Modise made a
R16.2 million gain on his share options; Irene Charnley made R6.4
million and Christine Ramon made R6.4 million.

How much of the
R35 profit per option that Bosman will receive will be determined by
the Absa board, which has the authority to decide what deduction should
be made for the early delivery of the options after consideration of
the rules of the scheme.
They will make a similar determination for Du Toit and Pardoe.

a R68 transaction price for the shares, Du Toit's options are showing a
potential profit of R13.9 million and Pardoe's a potential profit of
R24 million. Because Du Toit's options are older, he is likely to
secure a larger portion of his potential profit than Pardoe, whose
options were issued between 2001 and 2003.