Fifteen senior executives made pre-tax returns of more than pounds 100,000 by selling their privileged equity stakes, according to the union-funded Labour Research Department. At a time when the businesses are announcing large scale redundancies and keeping most employees' increases below 3 per cent, directors at 17 of 29 utility companies made hefty returns through the share perks.
The biggest profit traced by the LRD was made by James Smith, chairman of Eastern Electricity, who took up options on 121,107 shares and sold them to make a return of pounds 466,867 to add to his pounds 242,000 salary.
Under the share option system, directors are allowed to buy equity at a slight discount to market price and sell them in three to five years. If the share price has dropped they can let the option lapse and lose nothing. The LRD said Michael Heseltine, President of the Board of Trade, was 'wasting his time exhorting shareholders to vote against the more obscene pay and compensation packages'. The main shareholders were City institutions, 'profiting handsomely' from dividend payments.
The second largest profit on individual share options was made by John Seed, chief executive of South Western Electricity, who received pounds 445,137 on top of his pounds 213,000 salary. Board members John Sellers, John Bonner and Malcolm Carson made profits of pounds 169,894, pounds 150,530 and pounds 149,634.
Labour research Volume 83 Number 10; LRD Publications, 78 Blackfriars Road, London SE1 8HF; Price pounds 2.40.