Baltimore Technologies' recently appointed chief executive, Mr Bijan Khezri, has strongly defended the firm's proposal to pay its non-executive directors partly through share options. The Association of British Insurers (ABI), which represents institutional investors in the UK, opposes this practice. It believes that doing so puts non-executive directors in a conflict position if they are part of the same options scheme they have set up for executive directors.

But speaking to The Irish Times yesterday, Mr Khezri defended the proposal. "To redirect this business, incentivisation is essential and incentive schemes are crucial for individuals, non-executives and executive directors. It's critical after three profit warnings and with limited cash resources that people at the top show restraint. The board is very happy to be remunerated partly in options," he said, adding that Baltimore had made no formal proposal to the ABI.

Mr Khezri disputed the suggestion that giving options to non-executive directors compromised their independence. "I simply can't see that. Non-executive directors represent shareholders and if they're involved in the company on an equity basis, it aligns their interests with those of shareholders." Mr Khezri expects a solution to be found in the dispute, adding that the association did not have any difficulty with non-executives being paid in shares. "It has problems with options. It's not a big issue in terms of cash but it's an important principle."

The 2000 Baltimore annual report shows non-executive directors shared £250,000 sterling (E;400,256) in salaries and other payments. Mr Khezri, who was a non-executive director until late 2000, was on a salary of £80,000 a year. He also stated that an annual salary of £150,000 was as much as anybody in Baltimore should earn, himself included. "For a company like Baltimore . . . for any executive to earn £450,000 is unacceptable." This is a reference to the salary package former chief executive Mr Fran Rooney received last year.