Eircom shareholders have been asked to approve a plan to give share options and share awards to executives without being told the price at which they will be given. In a letter sent to shareholders yesterday Eircom chairman, Mr Ray MacSharry, outlined the group's Long Term Incentive Plan which he has asked shareholders to approve because "it is in the best interests of the company" and "important to its future success".

Eircom shareholders can vote on the plan at the company's a.g.m. on September 13th when it will be presented as the final item under "special business".

Under the plan up to 400 of the company's 13,000 employees - executive directors, senior and middle management - may be awarded share options and share awards at the discretion of the remuneration committee appointed by the board. The exercise of share options and share awards will depend on the performance of the company - Eircom must achieve growth in its earnings per share of not less than the increase in the consumer price index over the relevant period plus 5 per cent per annum compound.

With the Eircom share price now down 33 per cent on its €3.90 (£3.07) flotation level, many of the company's 488,000 retail shareholders are concerned that executives could be issued options to buy shares in the future at the current low price. Analysts feel that the current price is being held back by technical factors such as the impending sale of the KPN stake and the Telia shareholding as well as by a depressed market for telecoms shares.

If the share price at which executives can exercise their option is set at current market levels, the executives could make significant profits as the share price recovers by exercising the options and selling their shares in the market.

Stating that its plan has been agreed by the Irish Association of Investment Managers, an Eircom spokesman said the company was not required to set out the share price at which the options would be issued or when the options and share awards would issue. The remuneration committee concentrated on getting a scheme agreed with the IAIM and will now look at the other issues, he said.

While the IAIM rules set a minimum price at which options should be issued - not less than the market price at the time the options are issued - there are no rules to cover an unusual situation such as Eircom. In this case the share option plan is being prepared more than one year after flotation and at a time when the company shares have fallen by over 30 per cent from their flotation level. Eircom shares closed at €2.63 yesterday, down four cents on the day.

While the IAIM rules set a minimum level for the option price - which would allow the Eircom board to issue the options at current market levels - there is nothing to stop the board setting a price somewhere between current levels and the flotation price.

But market sources said this was unlikely to happen. They expect the price to be set at the level in the market immediately after the a.g.m.

Shareholders have been told that the beneficiaries of the plan will include "key employees for whom the level of award will vary, depending on their role, individual performance and criticality to the business".

While the letter stated that "directors" of the company were eligible to participate, a spokesman said that the only members of the board who could participate would be executive directors Mr Alfie Kane and Mr Malcolm Fallen.

Under the plan, executives can get options or share awards of up to a total of four times their annual emoluments over a 10-year period. Based on his current salary of £300,000, chief executive Mr Alfie Kane could get at least £1.2 million in options and awards while finance director Mr Malcom Fallen could get at least £1 million.