Eircom shareholders are being asked to re-elect director Mr Marten Pieters to the company's board, even though Mr Pieters represents Dutch shareholder KPN, whose 21 per cent stake is on the market. KPN's stake is expected to be sold in September. On September 13th, at the Eircom annual general meeting (a.g.m.), the votes of its 488,000 shareholders on Mr Pieters' re-election and six other issues will be counted. In addition, shareholders are being asked to re-elect Ms Annika Christiansson to the board. Ms Christiansson represents 14 per cent shareholder Telia, which is expected to sell its shares early next year.
Telia recently agreed to hold its shares for six months to facilitate the disposal of the KPN stake. Mr Pieters would be expected to resign from the Eircom board as soon as KPN sells its stake.
Asked why Mr Pieters was being put forward for re-election, Eircom said that under the articles of association, Comsource - which takes in the KPN and Telia shareholdings - is entitled to three directors. As one of the longest-standing directors on the board, and because KPN is still a very significant shareholder, Mr Pieters was automatically put forward for reelection. He has been a board member since 1996. Asked what would happen when KPN sold its stake, the Eircom spokesperson said that its two directors, Mr Pieters and Mr Patrick Morley, would resign and that Eircom would then co-opt two replacement directors. These co-opted directors would come up for re-election at the following a.g.m.
KPN's only comment on the issue yesterday was to stress that it had not yet sold its stake in Eircom. But the company's spokesman reiterated that its shares would be sold "as soon as possible". It is seen as highly unlikely that KPN will complete the sale of its 21 per cent stake before the a.g.m.
With a 30 per cent fall in the Eircom share price since its €3.90 flotation, the company's a.g.m. on September 13th is expected to be a stormy affair. The meeting is to be held in the main hall of the Royal Dublin Society in Ballsbridge, Dublin, and is scheduled to start at 11 a.m. With some 488,179 shareholders - made up of 338,715 individual shareholders and 149,464 shareholders within the Global Nominee Account - Eircom needed a venue with a large capacity. The RDS main hall can accommodate 5,000 people. Shareholders will be asked to vote on seven resolutions, including the re-election to the board of chief executive Mr Alfie Kane.
The final motion to be put to the meeting - item seven on the resolutions list - concerns the adoption of a long-term incentive plan for up to 400 senior and middle management, including Mr Kane and finance director Mr Malcolm Fallen. Shareholders will be asked to approve a plan to give share options (options to buy shares at a pre-set price) and share awards to executives to encourage them to improve the company's performance. But they have not been told the share price at which executives will be able to buy Eircom shares under the options part of the plan. This price is fundamental to estimating the potential value of the options.
While shareholders attending the a.g.m. may be given some indication of the share price at which these options will be issued, there was no information about this price, or about how and when it would be set, in the letter sent this week by chairman Mr Ray MacSharry to shareholders setting out the scheme.
Shareholders who attend the a.g.m. can vote against the proposed option scheme, but Comsource's 35 per cent and the 22 per cent held by Irish fund managers are sufficient to ensure that the scheme is approved. A spokesman for the Eircom staff employee share option plan (ESOP), said the trustees of the scheme had not yet met to decide the ESOP's attitude to the projected share option scheme.
