Energis chief sitting on pounds 1.1m profits from options

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The Independent Online
The chief executive of Energis, the fast-growing telecommunications business owned by National Grid, is sitting on paper profits of more than pounds 1m from the company's share option scheme. As Chris Godsmark and Patrick Masters report, the gains have already been achieved before the Grid floats part of Energis on the stock market, a move which could double the company's value.

Details of the share option schemes, revealed in documents filed with Companies House, give the clearest indication yet that some senior Energis executives stand to emerge hundreds of thousands of pounds better off from the flotation.

The documents, filed last month, show that Mike Grabiner, the chief executive poached last year from a top job with British Telecom, has already made profits on paper of pounds 1,193,692 from his share options. Chris Hibbert, Energis finance director, is sitting on pounds 352,210 of paper profits from the same option schemes.

Mr Grabiner was awarded 814,815 share options in September 1996 from Energis's executive scheme, at an exercise price of 108p, while Mr Hibbert emerged with 222,222 options.

The two directors were both also granted 21,562 options from a separate save-as-you-earn scheme, with an exercise price of 80p.

The documents show that Energis revalued its internal share price in August at 250p a share, a 75 per cent increase over last year's 143p valuation, yielding both directors substantial profits on paper. Although Energis is a private company wholly owned by the Grid, its shares are valued each year for the Inland Revenue by the group's auditors, Coopers & Lybrand. Employees were supposed to be able to trade their shares through an internal market, though no transactions have taken place and the process will be made redundant by the flotation.

The Grid introduced the share option scheme last year alongside a controversial share matching bonus plan for its own executives. The Energis executive scheme gives Mr Grabiner options worth up to four times his salary if he reaches performance targets, with other executives entitled to options worth three times their salary.

Mr Grabiner and Mr Hibbert look set to make further gains when the Grid offers shares in Energis to the public in December, because the valuation for public investors is likely to be almost double the company's internal price tag.

The documents reveal that the Grid has already valued Energis privately at almost pounds 500m. In a precursor to the flotation a further 76 million shares in Energis were issued to the Grid in August, adding to the 120 million shares created a year ago. At the 250p share price this has valued the company at pounds 490m.

Analysts have narrowed their estimates of Energis's flotation value to between pounds 700m and pounds 1bn and are predicting the Grid will sell off more than the 25 per cent of the company previously predicted. One analyst said the most likely outcome was that 30-35 per cent of Energis would be sold off, raising up to pounds 350m for its parent.