Make a million: work for Colt

MORE than 150 millionaires have been created at Colt Telecom and the communications group's chief executive, Paul Chisholm, is sitting on share options worth over pounds 130m following the astonishing rise in the company's share price this week, writes Jason Nisse.

Colt shares rose nearly 20 per cent in frenzied midweek trading before slipping back on Friday to close at pounds 20.80, a rise of 260p during the week. The spur was better-than-expected third- quarter figures, though the company, which provides telecommunications for business users, is still at least two years away from making a taxable profit.

Mr Chisholm, a former priest from New England who entered the telecommunications industry by accident, has options over 6.55 mllion shares at between 69p and 170p. These are currently valued at pounds 130m.

According to William M Mercer, the executive compensation specialists, these options make him the best-remunerated executive in British industry. "Earlier this summer we issued a discussion paper titled When will you pay your CEO pounds 100m?," said Tony Groom of Mercer. "At the time, some commentators thought we were being alarmist. But as we can see, this figure has already been achieved and exceeded."

Mr Chisholm is the largest beneficiary of a generous share option plan, launched just three years ago, which benefits 150 key executives at the company.

This scheme is now worth over pounds 700m, making the average payout for a Colt executive more than pounds 4.6m.

It is not only the executives who have benefited from Colt's bounty. The company operates a save-as-you-earn scheme for all its staff.

So far the purchase price for shares in that scheme has been 119p and 601p. According to Mercer, if an employee had taken up his or her full entitlement in the scheme, they would currently be sitting on a paper profit of pounds 159,000.

Colt has been criticised in some quarters for the generosity of its share incentive plans. But its major shareholder, the US group Fidelity Investments, has been highly supportive of the company. According to John Doherty, Colt's head of communications: "The only institutional investors who have complained are the ones who failed to buy Colt shares before they shot up in value."