The trust which holds 14.9 per cent of Eircom's shares on behalf of the company employees needs more information in order to make a decision on the proposed share-option scheme for executives, according to a trust source. "A lot of the detail is not available yet," he said. The trust would like more details of the proposed pricing of the shares to be granted to executives through options and of the percentage of the total number of shares that would be allocated each year over the 10-year granting period. It wants this information to be made available to all shareholders in advance of the annual general meeting.
Detailed rules of the proposed Eircom Long Term Incentive Plan, which shareholders can examine at the Eircom headquarters in Dublin or before the annual general meeting on September 13th, state that the price executives would pay per share on the exercise of an option would not be less than the market value of the share at the date the option was granted.
A seven-member trust board manages the Employee Share Ownership Plan (ESOP). While its 14.9 per cent holding in the company is significant, the trust's vote on the share options and other issues being put to shareholders at the annual general meeting on September 13th is not expected to affect the outcome. This is because the institutional investors, together with large shareholders KPN and Telia, control more than 51 per cent of Eircom. Institutional investors are expected to vote in favour of the share-option plan following its approval by the Irish Association of Investment Managers.
The ESOP trust has held an initial meeting to consider the circular to shareholders which sets out the resolutions which are to be presented at the annual general meeting.
"It was clear that a number of issues need to be considered in more detail so the trust will meet again closer to the date of the annual general meeting," said the source.
The Eircom board has asked shareholders to approve a share-option and share-award plan, which it said it needed to incentivise up to 400 senior and middle management. Under the proposed plan, options to buy shares could be awarded to executives each year over a ten-year period if the company achieved growth in earnings per share of not less than the consumer price index plus 5 per cent per annum compound.
Executives, including chief executive Mr Alfie Kane and finance director Mr Malcolm Fallen, would be able to get options to buy shares worth up to four times their annual emoluments - total remuneration including salary, bonuses, fees commission and benefits in kind. In "exceptional circumstances" this limit could be exceeded.
