The employee shareholding at ESB has warned that its rights as a shareholder must be taken into account if the company goes ahead with a plan to sell off some of its power stations in an attempt to reduce its market share.
The ESB and the Commission for Energy Regulation (CER) recently agreed that the company would sell or close plants producing 1,300 megawatts of power by 2010.
But the trustees of Employee Share Ownership Plan (Esop) at the company, who hold a 5 per cent stake, warn its view must be taken into account.
In a submission to the Government in response to the recent Green Paper, the group stops short of demanding some of the proceeds of these sales. But its submission does say its shareholding must not be diluted in any way by selling or closing plants.
"As the stockholder with legal obligations to protect the value of the capital stock, the trustee must be consulted and its rights as a stockholder recognised in relation to any proposals that could impact on that value, for example the price paid to ESB for any transfer of ESB sites to a State-owned land bank," it states.
The Esop in ESB represents 10,000 beneficiaries and is one of the largest in the country. The stake it has built up has been paid for by way of profit-sharing.
The submission also accuses the Government shareholders in ESB - the Departments of Finance and Communications - of having "possibly conflicting roles".
It says that on the one hand they have to observe the public good and protect state assets, but also are beneficial stockholders in the company.
The submission does not state its opposition to the CER's plan to get ESB to divest from various power stations, but it warns that "short-term fixes" may have adverse effects on the value of ESB capital stock.
The Esop says that taxation implications need to be borne in mind by all sides.
"Under the legislation governing Esots, the trustee cannot acquire shares or stock in any company other than the founding company - namely ESB. If the capital stock were to be sold from the Esot, any sale proceeds would be fully taxable at income tax rates in the hands of the beneficiaries. The effect of this is that the trustee is tied in as an investor in ESB and cannot diversify its stock nor dispose of it in order to mitigate risk," it points out.
The size of employee share holdings in the semi-state sector is not uniform. The Aer Lingus Esot ended up owning over 12 per cent of the equity before its flotation last year. When Eircom floated originally its staff shareholding owned approximately 15 per cent.
