Gartmore's hard options

GARTMORE, the investment manager, is attempting to give a lead to other institutional investors by making its share option scheme subject to clear performance targets, writes Paul Durman.

Gartmore staff will not be able to exercise options in future unless the company's share price growth, over at least three years following the grant, has at least equalled the performance of the FTA All-share index. Additionally, Gartmore's earnings per share growth must have beaten the retail price index by at least 2 per cent a year.

Gartmore directors will not receive options among the grants that will begin in the next few days.

The Association of British Insurers and the National Association of Pension Funds have been lobbying to stop senior managers making large profits on share options unless their companies have genuinely improved.

Paul Myners, Gartmore's chairman, said companies often set themselves easily achievable targets, such as share price outperformance in any three years in 10.

'We have tried to set targets which most people would regard as being demanding. At the same time, one wants to set the bar at a level which the jumper feels he has a chance of getting over.'

Gartmore, which came to the market last November, said that its first quarter profits were significantly higher than last year.