Windfall boost for Grid directors

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Business Editor

The unexpectedly high sale price of First Hydro, the pumped storage electricity generating business, has brought a windfall of pounds 45,000 to David Jefferies, chairman of National Grid.

This latest in a long line of share and option profits made by Mr Jefferies came because First Hydro was sold for pounds 652m rather than the pounds 450m forecast in the prospectus last month for the flotation of National Grid, which owned First Hydro and was sold to Mission Energy of the US earlier this week.

Three other National Grid directors, John Uttley, Colin Gibson and Eric Chefneux, also appear to have made a total of pounds 25,000 more than the prospectus figures indicated.

The gains arose as a result of the demerger of First Hydro from National Grid in preparation for its sale.

Staff and executives holding National Grid shares and options were compensated for the diminution in the value of their investment - as a result of the demerger - by an issue of shares in the holding company of First Hydro.

Altogether, 500 National Grid staff appear to have owned 0.4 per cent of First Hydro's holding company, PSB.

This was worth pounds 2.6m at the price paid by Mission Energy. National Grid said the holdings were widely spread among the company's staff.

According to documents released at the time of the National Grid flotation, Mr Jefferies had pounds 99,623 worth of shares in First Hydro's holding company, now worth more than pounds 144,000; Mr Uttley had pounds 23,875 (pounds 35,000); Mr Gibson pounds 10,429 (pounds 15,000), and Mr Chefneux pounds 22,400 (pounds 32,000).

The sale price values the total holdings of the four executive directors at pounds 227,000.

The Grid executive directors first ran into controversy when they realised large profits on their share options in the 1994-95 financial year. This autumn they ran into a new storm when they insisted on their right to receive a special dividend paid as part of the restructuring of the Grid.