Option payout for Bumi Armada CEO

Kuala Lumpur: The major shareholders of Bumi Armada Bhd appear to have worked out a financial package to keep and reward the oil service provider's chief executive officer (CEO) Hassan Assad Basma.


Its five shareholders, holding a collective 70 per cent of Bumi Armada after the listing, have given him the option to buy 7.5 million shares from them at RM2.25 apiece, 29 per cent less than the initial public offering (IPO) indicative price of RM3.15.

This means that Hassan is already sitting on a paper gain of RM6.75 million, based on the current IPO price. It also means that he stands to make more if Bumi Armada's share price does better when it starts trading on July 21.

"The call option has been granted to Hassan by the grantors, our existing shareholders, in recognition of his services to our group since September 2005," Bumi Armada said in its prospectus.

Last week, Bumi Armada launched Malaysia's biggest IPO so far this year, which will raise some RM2.77 billion. The group operates offshore support vessels and FPSOs, ships that can extract, process and store oil, for the oil and gas industry.

The call option is designed to retain the CEO and motivate him to improve the company as it is done in three tranches of equal sizes, over two years.
The first block of 2.5 million shares must be exercised in five business days from July 1, giving Hassan until the end of July 7.
The second block can be exercised from the first anniversary of Bumi Armada’s listing date, or July 21 2012, and the third can be exercised from the same date in 2013.
On top of this call option, the group’s directors have granted some 17.5 million share options to Hassan and the exercise price would be the final retail price under the IPO.