Baltimore rebases share option scheme

The software company Baltimore Technologies yesterday proposed rehashing its staff incentive scheme for the second time in just over a year in a move that will see all 300 workers given shares for free.

Under the new scheme, Baltimore employees will be able to swap their current options, the bulk of which are priced at about 16p a share, for half the number of new options at 0p a share.

Five company executives, including the chief executive Bijan Khezri, will end up with about 1 million to 1.25 million options at 0p a share, currently worth between £55,000 and £68,750.

"With the unforeseen and dramatic change in the global equity markets, options based on a market price no longer provide a suitable long-term incentive for employees," Peter Morgan, the chairman, said.

The plan replaces a previous share option scheme, which had been rehashed last October, under which staff could swap old options for new ones priced at about 16p a share. Since last October, however, Baltimore's shares have fallen further, putting those options under water. The stock rose 0.5p to 5.5p last night.

Baltimore said that options granted under the new three-year scheme would vest at a rate of 25 per cent every nine months – meaning staff would end up owning all their shares in the middle of December 2005.

In addition, Baltimore said it planned to reverse a 10-for-one share split carried out in May of 2000 when its shares had traded as high as £137.50.

"We believe that if you have a stock price in the magnitude of the tens of pennies, it is more sensible than being at around 5p," Mr Khezri said. "If you have a price as low as 5p, you constrain liquidity," he added.

Baltimore Technologies is holding an extraordinary general meeting on 16 December to seek shareholder approval for both the incentive scheme and reverse split.

Mr Khezri said the company, which has some £23m of cash and which hopes to become profitable in the first half of next year, was in "very good shape".