Adcock Ingram awarded a number of its executive directors share options last week in terms of the Adcock Ingram Employees Share Scheme.
The award basically allows directors to purchase shares in the company at a discounted price.
CEO Andy Hall was granted 200,000 options at a strike price of R42.30 with vesting periods of August 26 in 2019, 2020 and 2021. The total transaction value at the strike price is R8.5m.
CFO Dorette Neethling was granted 150,00 options with a transaction value of R6.35m, andgroup human capital executive Basadi Letsoalo was granted 45,000 options with a value of R1.9m.
Investor relations manager Vicki St Quintin says the options were granted in line with Adcock’s retention strategy.
"The long-term incentive scheme serves as one of the company’s retention-and-reward mechanisms for key talent, which includes but is not limited to executive directors and the company secretary," says St Quintin.
"In accordance with principles of good corporate governance the board, following recommendations of the human resources, remuneration & nominations committee, annually allocates share options to our critical talent."
Hall and his team of executives have weathered a difficult three years following the 2013 announcement by Bidvest that it intended to acquire the pharmaceutical company.
At the close of 2013, at the peak of rumours of a total takeover, the maker of Panado was trading at a share price of R70.90. Earlier this year, the share price fell as low as R35.44, but it has since started an upward trajectory.
Other than the fight to retain control from the bloodhounds of Bidvest, factors such as the weakening rand against the dollar and the introduction of controlled pricing in the pharmaceutical environment all played their part in knocking the share price down.
The company, however, seems to be coming to grips with these challenges.
Bidvest, the largest shareholder of the company with about 37% ownership, has not taken over but has ushered in a strategy that has seemed to work well for Adcock. The company has reorganised its group into autonomous operating divisions, just like Bidvest, and is looking to diversify its business by branching into branded products for personal care, baby care and home care. In the latest results, released in August, Hall said the group now had "significant resources available" and would maintain its focus on "expanding the group’s product portfolio, particularly in nonregulated areas though acquisitions or partnerships".
Meanwhile, industrial giant Bidvest has been on a mission to streamline its operations and, as a result, it may divest or sell its shares in Adcock.
As CEO Lindsay Ralphs said in Bidvest’s annual results to June, the company needs to take a "long look at the strategic value" of Adcock, along with its stakes in businesses such as Comair.
Former Bidvest CEO and now nonexecutive director Brian Joffe — who led the charge in the quest to acquire Adcock — sold R53.6m of Bidvest shares last week to diversify his investment portfolio. The sale was done through JDL Holdings, Joffe’s investment vehicle.