Four hundred senior managers at Eircom are in line for lucrative share options at significantly less than last year's flotation price after a shareholder revolt at yesterday's annual general meeting failed to block the telecom group's long-term incentive plan.
At the meeting, attended by 4,000 angry shareholders, chairman Mr Ray MacSharry strongly defended the incentive scheme in the face of ferocious criticism from private investors who felt management was being rewarded while they suffered a 33 per cent fall in the value of their investment in Eircom.
Mr MacSharry said the options would be allocated at €3 (£2.36) or the market price in mid-November, whichever was the higher. But he emphasised that the options could only be exercised if the company met very demanding targets and Eircom's earnings per share rose by at least the rate of inflation plus 5 per cent.
Based on the current inflation rate, that would require earnings growth of more than 11 per cent to trigger the options.
The long-term incentive scheme was opposed by the trust which manages the 14.9 per cent stake in the company owned by Eircom employees, partly because it felt the target earnings growth of inflation plus 5 per cent was not achievable given Eircom's need for heavy investment.
The chairman of the trust, Mr Con Scanlon, told the a.g.m. that its advisers believed Eircom's earnings were actually going to fall.
While the Government still holds around 1 per cent of Eircom shares, no representative of the Minister for Public Enterprise, Ms O'Rourke, spoke at the meeting.
The Minister voted against the long-term incentive scheme by proxy and, according to her spokesman last night, did so because she felt the level of remuneration involved was inappropriate.
The approval of the long-term incentive scheme and the other motions to re-elect directors and approve the annual report was a foregone conclusion with Mr MacSharry holding proxies for more than 50 per cent of Eircom shares.
That, however, did not stop the shareholders from mounting a savage attack on the performance of the board and also the bonus payments paid to chief executive Mr Alfie Kane and finance director Mr Malcolm Fallen.
Mr MacSharry stoutly defended the bonuses paid to the two executives and insisted that their pay packages were in line with other large Irish public companies.
He added that the bulk of the payments to Mr Kane were back pay reflecting the growth of the business.
Mr MacSharry refused repeated demands to disclose his own remuneration.
It is understood, however, that the chairman received £110,000 last year from Eircom.
The attack on the board was led by Senator Shane Ross, who said he held 28,000 proxies and more than 30 million votes. "The only people who are guaranteed to have benefited are the directors who have taken out enormous payments, unprecedented in my life that I've seen from any public company," he said.
Senator Ross said that some of the directors had not even bought Eircom shares.