KUALA LUMPUR (Jan 29): Comfort Gloves Bhd has moved to terminate its existing share scheme (ESS) on the grounds that it is not suitable to attract, motivate and reward employees and directors.

According to a bourse filing today, the exercise price of its ESS shares is at 93.5 sen per share. The ESS options “are currently out-of-the-money” based on yesterday’s closing price of 88 sen. The stock closed at 85.5 sen today.   

The ESS stood at some 30.81 million shares. However, the group said that it was looking at alternative means of rewarding its employees and directors.

Comfort Gloves had established the ESS in September, 2014, and it constituted up to 15% of issued and paid up share capital to all eligible employees for a period of five years, expiring on Sept 9 this year.

However, in December 2017, the group moved to extend the expiry date of the ESS to Sept 9, 2024.

Upon the establishment of the ESS, the company created a Share Option Reserve amounting to RM2.28 million in recognition of the ESS fair value. It was computed based on the Trinomial Option Pricing Model. Hence, the termination of the scheme will result in its profit to increased to RM20.8 million compared with RM18.51 million as of Oct 31, 2018.

Its basic earnings per share will increase from 3.29 sen to 3.7 sen, while its diluted earnings per share will increase from 3.02 sen to 3.57 per share.

“The ESS Committee, after due consideration, has proposed to terminate the existing ESS and the Board (save for the Interested Directors), after taking into consideration of all aspects of the Proposed ESS Termination is of the opinion that the Proposed ESS Termination is in the best interest of the Company and its shareholders.” said the group.

Shares of Comfort Glove stood at 85.5 sen per share, going down by 2 sen or 2.29% — with 290,200 shares traded — giving it a market capitalisation of some RM491.71 million.