Share options for 5,000 at British Energy

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The Independent Online
Around 5,000 employees of British Energy, the privatised nuclear generator, are to receive at least 1,000 share options for the first time next month, worth a minimum of almost pounds 1,500 at yesterday's closing share price.

The group also revealed a pounds 1.5bn deal with British Nuclear Fuels (BNFL) to cover much of its outstanding fuel reprocessing liabilities, which will save British Energy pounds 10m a year. The reprocessing deal covers fuel from five advanced gas cooled reactors at fixed prices, which would pass some of the risk in the contracts over to BNFL. British Energy raised its accrued liabilities for reprocessing and decommissioning by pounds 53m last year to pounds 3.8bn.

The share option scheme came a year after privatisation which has seen British Energy shares surge from their flotation value of 105p on the back of generous dividend payments guaranteed by the government.

All staff will receive 1,000 share options from 15 July at the current share price on that day. If they stay with the company they will be able to exercise the options in three years' time, making a profit if the price then is higher than the price now. Employees with more than five years' service will receive more options up to a maximum of 2000 shares.

Mike Kirwan, finance director, said such as broad scheme was "very unusual". He continued: "It's much more driven by out belief that employees are properly motivated if they are properly incentivised." Asda, the supermarket group, is one of the few large UK companies that have extended share option schemes to all employees as opposed to other save-as-you-earn schemes.

Bob Hawley, the chief executive, said board executives would also receive share options for the first time, along with other senior managers. He declined to spell out details of their scheme, except to say it would be linked to performance targets, though he said more detailed would be given at British Energy's annual shareholders' meeting on 18 July.

Mr Hawley, who was paid a basic salary of pounds 207,000 in the year to March, said the executive scheme would not be "abnormal". He added: "We are lean cats really." The group said it had no plans for a long-term incentive plan on top.

British Energy yesterday announced its first set of profits for the year to March of pounds 36m after tax, compared with pro-forma losses the previous year of pounds 155m. The shares rose 9p to 148p, though they remain below their peak of 163.5p.

Efficiency savings helped to lift profits, with the Sizewell B reactor running with an 81 per cent load factor, including statutory cut-offs for safety checks. The company increased its share of the energy market from 19 to 21 per cent. The cost-cutting programme continued, with 484 staff leaving to bring the workforce down to 5,940.