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==New Tel poll on chief's options offer

  1. Billy Gatess

    5,609 Posts.

    New Tel poll on chief's options offer

    By Fran Spencer

    SHAREHOLDERS in Perth-based telco New Tel will be asked to vote next month on a resolution to hand chief executive Peter Malone an incentive package of 50 million options - the second such proposal in less than nine months.

    A letter to shareholders, released yesterday ahead of the company's meeting on August 22, revealed proposals to issue 50 million options to Mr Malone and five million options to New Tel director Gary Koh over the next five years.

    Half of each package is free of any conditions, with the issue of the remaining options subject to performance hurdles.

    According to the terms of the issue, Mr Malone would receive 25 million options and Mr Koh 2.5 million exercisable at 25¢ within three years. A second tranche of 12.5 million and 1.25 million respectively would be exercisable at 35¢ within four years, and a third at 50¢ within five years.

    The second tranche would be subject to New Tel achieving earnings before interest, tax, depreciation and amortisation of at least $1 million a month for three consecutive months, and the third to EBITDA of at least $2 million a month for three months.

    Mr Malone was awarded 50 million options in an incentive package with identical conditions on November 30 last year.

    The move comes as the criticisms levelled at such deals come under increasing fire worldwide.

    Australian Shareholders"Association chairman Ted Rofe said options packages "might be used to provide incentive, but it can be the wrong sort of incentive".

    "On the face of it (the package proposed for Mr Malone) does seem a bit overblown unless there's some very good explanation or justification," he said.

    But Mr Malone yesterday said the deal had been proposed by the major shareholders, and was part of New Tel's established remuneration policy.

    "The board's not going to put that up unless it's straw polled (the major shareholders) . . . they see it as a pretty good way to develop an ethos in the company," he said.

    "I think the board sees it as rewarding the CEO who has been developing the program for the last four years . . . there's a bit of commentary in the market on options packages but they really relate to people in the established business where there's a guaranteed return.

    "In this particular case (the option prices) are about 60 per cent above the market price."

    New Tel shares yesterday closed unchanged at 15¢.

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