The Minister for Public Enterprise, Ms O'Rourke, may vote her remaining 8.3 million shares in Eircom against the controversial share option scheme proposed for the company's executives. A spokesman for the Department of Public Enterprise said last night that the Minister had not decided whether or not to support the scheme when it is put to a vote of shareholders at the company's annual general meeting next month.
One of her party colleagues has already said that Ms O'Rourke should vote against the share option package. Mr Dick Roche, a Fianna Fail TD for Wicklow and a member of the Oireachtas Committee on Public Enterprise, said last night that he would be writing to the Minister asking her to not to vote for the scheme.
Mr Roche, who himself has £3,000 invested in Eircom shares, said that the company's executives did not deserve such a scheme. Other Fianna Fail backbenchers are expected to support Mr Roche's stance and put pressure on Ms O'Rourke to oppose the scheme.
The Government's shares are the rump of the 1.1 per cent of Eircom that was retained after the company was floated last June. The Government held on to the shares in order to give bonus shares to small investors who did not sell for 12 months after the flotation.
The 8.3 million shares that the Government still holds represent surplus bonus shares and also shares that were not sold because the purchasers were not able to complete their transactions.
The shares are held in the name of the Minister for Public Enterprise on behalf of the State, according to the Department. Ms O'Rourke would be entitled to attend the meeting and vote in person or else appoint a proxy to vote in her stead.
Although Ms O'Rourke's stake represents less than 1 per cent of the company, a decision by the Minister, as the former owner of the company, not to support the scheme would be seen as a significant censure of the company.
The chairman of Eircom, Mr Ray MacSharry, is a former Government minister and a party colleague of both Ms O'Rourke and Mr Roche.
Ms O'Rourke refused to allow Eircom bring in a executive share option scheme at the time of the flotation. However, she said it could introduce one after the flotation, provided it complied with the Irish Association of Investment Managers' (IAIM) guidelines.
The scheme that will be put to a vote on September 13th allows for the senior executive to be given options over shares subject to a maximum of four times their annual pay packets. Depending of the definition of pay that is used, Mr Alfie Kane, the company's chief executive, could get options worth between £1 million and £2 million.
Crucially, the shareholders are not being told the price at which the shares are to be issued. IAIM guidelines stipulate that they cannot be awarded at less than the market price on the day they are granted.
A spokesman for the Department also confirmed last night that the Government approved the controversial bonus scheme that saw Mr Kane receive an extra bonus of €952,303 last year in respect of work done in 1997 and 1998. This bonus was in addition to Mr Kane's share of a €1.2 million bonus paid to him and Mr Malcolm Fallen, the company's financial director, in respect of the 1999 flotation.
