Eircom's chief financial officer Mr Peter Lynch who was appointed on January 2nd and has overseen the rationalisation of the company's multimedia interests has been guaranteed a bonus of about €70,000 (£55,130) on top of his basic annual salary of €279,400 for the year to the end of March 2002.
The Eircom document on the proposed sale of Eircell to Vodafone which has been seen by The Irish Times sets out Mr Lynch's term of service. He is entitled to an annual bonus of 20 per cent of his base salary for the achievement of "target performance" and up to 30 per cent of base salary for the achievement of "special or stretched targets".
The document goes on to state: "Mr Lynch's bonus is guaranteed to be not less than 50 per cent of his total possible bonus in respect of the financial year ending 31st March 2002."
The document will be posted to shareholders tomorrow with the Vodafone offer document.
It shows chief executive Mr Alfie Kane is paid a basic annual salary of €444,500. It states that Mr Kane is "entitled to benefit from an annual bonus" which is not specified, and to be "considered for long-term incentive arrangements beyond April 1st, 2000".
He is entitled to 12 months' salary if he resigns following the acquisition of 50 per cent or more of Eircom. In such circumstances Mr Lynch would receive a payment of unexpired salary up to December 31st, 2002. If he resigned in a take-over situation after December 31st, 2001, he would receive a payment of 12 months' salary.
The document shows Mr Lynch owns some 504,655 Eircom shares compared with 20,922 owned by Mr Kane including a notional allocation under the Employee Share Ownership Trust. Chairman Mr Ray MacSharry owns 11,862 shares while director Mr Dick Spring owned no shares at April 6th, 2001.
Mr Spring came under attack at Eircom's annual general meeting for his failure to buy shares in the company. He said last August, after that meeting, that he would invest in Eircom at the "earliest opportunity".
Neither Mr Kane or Mr Lynch have fixed-term contracts with Eircom, the document states.
The Eircell document does not set out the results of the group for the latest financial year, which ended on March 31st, 2001. It gives current trading and profit estimates for the year to end-March. The group expects to report turnover of €2.1 billion (€1.7 billion excluding Eircell) and earnings before interest, tax, depreciation and amortisation of €640 million (€445 million excluding Eircell).
However, these figures are before exceptional costs, asset impairments and write-downs which the group has already warned would affect the results.
Irrevocable undertakings to accept the Vodafone offer for Eircell have been given by the Eircom directors who are shareholders and by Comsource which represents the 35 per cent held by KPN and Telia.
Eircom shareholders will be asked to vote on the de-merger of Eircell from Eircom and the Vodafone offer for Eircell at the e.g.m. on May 11th. The meeting will be held at the Point Depot in Dublin at 11 a.m.
