Blue Square's Top Managers May Get $19m in Stock Options

Blue Square Israel's controlling shareholders, headed by David Wiessman, will advise the company's board of directors to approve a proposal to give senior executives options that can be converted into around 5 percent of the company's stock, according to sources close to the talks on Blue Square's strategic plan.

The options plan is contingent on the company meeting its business targets for 2004.

Blue Square is valued at some $384 million; hence, the value of the perk is expected to reach around $19 million in current terms, and will be enjoyed by some 300 branch managers, regional managers, commercial managers and deputy CEOs.

Wiessman, CEO of Alon Israel Oil Company, confirmed the options proposal yesterday, but refused to elaborate. He said, however, that all Blue Square employees would receive 1 percent of any bonus given to the company's owners. Thus far, Blue Square has distributed dividends to the tune of some NIS 500 million, of which employees have receive around NIS 5 million.

Wiessman also said that workers at the Blue Square branches that met their business targets for the year would enjoy a remuneration program.

"Strategically, I view including the employees as a very essential part of the company's success," Wiessman said. "The strategic move is intended to create a link between rewarding the executives and the company's performance, with the emphasis placed on identifying the common interests of the shareholders and the Blue Square employees."

Blue Square, which was purchased some 12 months ago by the Bronfman-Alon group, has compiled a work plan for 2004 and a multiyear strategic plan that will be presented for approval to its board of directors in the near future. The plan includes the scaling down of brands, from seven sub-chains to two central ones - Super Center and Mega.

Under the plan, the directors will also be asked to approve dropping the veteran Co-Op brand. Small Co-Op stores will be converted at a later stage into convenience stores, which will be run without meat and vegetable sections, as is customary in the United States.

At present, Blue Square runs 30 Mega branches, 66 Super Center outlets and a Super Center city, 24 Co-Op stores, seven King Center branches, seven Zil Ba'zol outlets and 10 Shefa Shuk stores. Following consolidation of the brands, the chain will remain only with the Mega and Super Center brands, together with Shefa Shuk, which targets the ultra-Orthodox market.

The Co-Op, King Center and Zil Ba'zol branches will be converted into Super Center outlets, and around 10 of them will be shut down, as part of a plan announced by Blue Square a few months ago.

During the course of 2004, Blue Square will open 4 to 6 new Mega branches and 2 or 3 Super Center City facilities.