Eircom shareholders heckle management

By Andrew Bushe

DUBLIN — At a stormy first annual general meeting, the bosses of former state telecom company, Eircom, were booed and heckled by thousands of investors complaining about the dismal share price performance and management perks.

They strongly objected to bonuses paid to senior management and directors and a proposed share option plan for 400 executives.

When the former Telecom Eireann was floated last year at 3.90 euros (_3.07) a share, 574,000 invested to make it the country’s largest-ever share offering and it became known as the “People’s company.”

The share price was down to 2.70 euros on the day and thousands of disappointed people turned up last Wednesday at Dublin’s Royal Dublin Society to vent their anger.

Many investors had borrowed to jump on the bandwagon of what was seen as “sure thing” last year. Others had used their nest eggs and pensioners had put in their life savings — some even said they paid their “funeral money.”

During an AGM unprecedented both for the size of the attendance and the invective of shareholders, the embattled directors faced a barrage of criticism for about four hours.

One investor even sang a song, “What’s it all about, Alfie?” to group CEO Alfie Kane.

There was no relief from the former owner of the company on behalf of the state. Pubic Enterprise Minister Mary O’Rourke instructed her officials to use the government’s remaining shares to vote against the controversial option scheme.

She said an “inappropriate amount” in the circumstances was involved.

There was no vote of confidence from the Eircom staff either. Trustees who hold 14.9 percent of the stock on behalf of the 11,000 workers also voted against the share option scheme.

Eircom’s chairman, Ray MacSharry, former EU Commissioner and finance minister, strongly defended the company’s trading record.

He said the current share price does not adequately reflect the true value of the company. It was a result of factors largely outside its control.

He blamed negative international sentiment toward Irish equities amid concerns about the sustainability of the Celtic Tiger economy, the decision of telcos KPN and Telia to sell their respective stakes, amounting to 35 percent, and what he described as a “dramatic weakness” in the overall European telecom sectors.

KPN (21 percent) and Telia (14 percent) became strategic partners in 1996.

MacSharry said the situation would correct itself. “I am extremely confident about the future,” he said. “I do believe this business will produce results for shareholders.”

Senator Shane Ross, who has set himself up as the champion of the small investor’s champion, received proxies from more than 28,000 people.

He voted against the re-election of the directors and a proposed executive share-option scheme but strong support from institutional investors carried the day on all the controversial votes.

Ross wanted the share options set at the launch price of 3.90 euros in comparison to a 3 euros price expected to be set by the remuneration committee.

“Who has benefited from this company since it floated? The boys. The only people who are guaranteed to have benefited are the directors who have taken out enormous payments, unprecedented in my life,” he said.

Director Dick Spring, the former Labor Party leader, was questioned about why he had not bought shares at the launch.

He said that he had no money at the time of the IPO but would be buying shares now to demonstrate his confidence in the company.