John Fletcher, the new chief executive at Australia's biggest retailer Coles Myer Ltd, will be granted 2.5 million options as part of a five year incentive package to shake the company into shape.

The options over its ordinary shares will be granted in five tranches of 500,000 with a strike price of $6.33. Each tranche of 500,000 will vest on 10 September in each successive year providing performance hurdles at the end of the previous financial year are met, the company said.

These performance hurdles will be based on relative total shareholder return in the 50th percentile, or better, in the top 50 industrials, or a minimum required earnings per share growth expressed as a compound annual growth rate.

The long-term package is designed to ensure Mr Fletcher implements a long-term solution to the group's problems.

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