ESBEmployeeShareOwnership Plan InternalMarketRoadshow - - PDF document

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ESBEmployeeShareOwnership Plan InternalMarketRoadshow - - PDF document

Aug 24, 2023 185 likes •374 views

ESBEmployeeShareOwnership Plan InternalMarketRoadshow September/October2008 Agenda Welcome WhyWeAreHere BackgroundtoESOP InternalMarket &

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SLIDE 1

ESBEmployeeShareOwnership Plan

InternalMarketRoadshow

September/October2008

Agenda

  • Welcome
  • WhyWeAreHere
  • BackgroundtoESOP
  • InternalMarket

& Weaknessesinexistingmarketrules & Proposedamendments

  • Approvalprocess
  • Nextsteps
  • Questions
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SLIDE 2

WhyWeAreHere

  • Trusteeadvisedthatunderexistingrulesforced

sellerswereexposedtoarealriskthatthey wouldnotreceivefairvaluefortheirshares

  • Trusteehasobligationtoactinbestinterestsof

participants– wouldnothavebeeninbest intereststorunmarketthatdidnotwork

BackgroundtoESOP

  • AgreedaspartofCostandCompetitiveReviewin1996
  • ESOPestablishedinDecember2001
  • Acquired99munitsofESBCapitalStockatatotalcost
  • f€75.8m
  • Representing5%ofthesharecapitalofESB
  • Opentoallemployeeswithqualifyingservice
  • Full5%ofsharesnotionallyallocatedtoparticipants
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SLIDE 3

Background& WhatistheESOP

AnESOPisataxefficientmechanismdesigned toallowemployeesofacompanytoacquire sharesinthatcompany. TheESBESOPismadeupoftwoRevenue CommissionerapprovedTrusts:

  • ESOT– EmployeeShareOwnershipTrust
  • APSS– ApprovedProfitSharingScheme

Background– WhatistheESOP Transferofownershipofshares:

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SLIDE 4

Background– TaxImplications

  • NoincometaxliabilityprovidedsharesheldinTrustfor3

years

  • 20%withholdingtaxdeductedonanycashdistributions
  • rdividendpayments
  • Potentialcapitalgainstaxliabilityonsaleofshares

& 20%ofincrease/gaininvaluefromdateof appropriationtodateofsale & annualindividualallowanceof€1,270

Background& TheTrustee

  • CorporateTrusteeholdsthesharesonbehalfof

participants– ESBESOPTrusteeLimited

  • SubsidiaryofESBbutESBhasnocontrolover

thecompanyortheshares

  • RoleofTrusteetoactinthebestinterestsofthe

participants

  • Trusteemustadheretotheprovisionsofthe

TrustDeed

  • Trusteeresponsibleforthemanagementand
  • perationoftheESOP
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SLIDE 5

Background& TrusteeBoard

Union Nominees Company Nominees ProfessionalTrustee

Background& ShareholderIssues

  • ResponsibilitiesofTrustee
  • ESOPalongterminvestorinESB
  • ConflictingroleofMinister
  • ESOPwillcontinueseekingtoprotect

shareholderinterests

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SLIDE 6

Background& TransferofShares

Twostepprocesstotransfersharesto participants:

  • 1. NotionalAllocation

(sharesheldinESOT– topTrust)

  • 2. Appropriation

(sharesheldinAPSS– bottomTrust) Background– ParticipantsWho LeaveESB

ParticipantswholeavetheESBGroupwillhaveno furtherentitlementtoanynotionalallocationsofnew shares (NB:full5%ofsharesnowallocated) ParticipantswhoarenolongeremployedintheESB Groupwillberequiredtoselltheirsharesthreeyears fromthelaterof: thedateofleavingor thedateofappropriationofthoseshares

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SLIDE 7

Agenda

  • Welcome
  • Whywearehere
  • BackgroundtoESOP
  • Approvalprocess
  • Nextsteps
  • Questions

InternalMarket

  • Weaknessesidentifiedincurrentrules
  • Processundertakentoreviewtherules
  • Proposedrevisionstotherules
  • Limitationsandbenefitsofproposal
  • Processtoamend
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SLIDE 8

InternalMarket& Weaknessesin ExistingRules

  • Donotprovideforlargenumberofforcedsellers
  • Decreasingnumberofpotentialbuyersbutincreasing

numberofsellers

  • Noguaranteeastominimumprice
  • Forcedsellersdisadvantaged
  • Marketwouldnotwork

InternalMarket& ReviewProcess

  • Soughtlegalandfinancialadviceonoperationof

market

  • SoughtCounselOpinionondeferralof

appropriation

  • Developedpackageofamendmentswith

advisers,theCompanyandGroupofUnions

  • Seekingapprovalforamendmentsidentified
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SLIDE 9

InternalMarket– Proposed Amendments

  • Trusteetoappropriateupto50%ofshares
  • Balancetoberetainedtoprovidedividendincometo

purchasesharesonmarket

  • Trusteetotakeactiveroleinmarket
  • Trusteetohavemaximumflexibilityindeterminingitsbid
  • SharesacquiredbyTrusteetobeallocatedtoqualifying

beneficiariesorre&soldonmarket

InternalMarket– Proposed Amendments

  • Neweremployeestobeabletobidforshares
  • Forcedsaleperiodtobeextendedtobetween3and6

years

  • Forcedsellerstoget3yearstosellshareswith

minimum/reserveprice

  • Forcedsellersrequiredtosell1/3rd ofremainingshares

ineachofyears4,5and6withnominimumprice

  • Allsuccessfulsellerstoreceivetheweightedaverage

successfulbidprice

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SLIDE 10

InternalMarket

8,800Current(86%), 91mShares(92%) 1,400Leavers(14%), 8mShares(8%)

InternalMarket

!

Current6,200(61%), 66mshares(67%) Leavers4,000(39%), 33mshares(33%)

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SLIDE 11

InternalMarket

"#$

4,400Current(43%) 5,800Leavers(57%)

InternalMarket

"#%$

6,000Current(51%) 5,800Leavers(49%)

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SLIDE 12

InternalMarket

  • Proposalallowsmarkettobeestablished

andsharestobeappropriated

  • Aninterimsolutiontobekeptunder

constantreview Agenda

  • Welcome
  • Whywearehere
  • BackgroundtoESOP
  • InternalMarket

& Weaknessesinexistingmarketrules & Proposedamendments

  • %&
  • Nextsteps
  • Questions
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SLIDE 13

ApprovalProcess

Tomaketheamendmentsrequires AgreementfromTrusteeBoard√ ConsentofESB√ ConsentofGroupofUnions√ ConsentofRevenueCommissioners(√) ConsentofMinistersforFinanceand Communications,Energy&NaturalResources√ Approvalfromaballotofparticipants

ApprovalProcess& Ballot

  • Postalballot
  • Ballotpapersissuedtoregisteredaddressesofallparticipants on10

October

  • Askedtovoteonpackageofamendments
  • Ballotpaperstobereturnedinenvelopesprovidedby31October
  • Ballotresultannounced5November
  • Majoritydecision
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SLIDE 14

Agenda

  • Welcome
  • Whywearehere
  • BackgroundtoESOP
  • InternalMarket

& Weaknessesinexistingmarketrules & Proposedamendments

  • Approvalprocess
  • '
  • Questions

NextSteps

  • Ballotcloses31October
  • Resultofballotannounced
  • Allocationofshares“boughtback” fromEstatesofdeceased

participants

  • SharevaluationagreedwithRevenueCommissioners
  • Appropriation
  • InternalMarket
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SLIDE 15

NextSteps& Appropriation

  • ValueofsharesagreedwithRevenueCommissioners
  • Participantswillbeadvisedofvaluationandmaximum

numberofsharesavailableforappropriation

  • Basedonnumberofsharesavailable,notional

allocationsandRevenuelimitof€12,700perannum

  • ParticipantconfirmstoTrusteenumberofshareswishto

haveappropriated

  • SharestransferredfromtheESOTtotheAPSSand

appropriatedtotheparticipant

NextSteps– InternalMarket

  • Internalmarketheldonceayear
  • Participantsoffersharesforsale

& currentemployees– minimumprice & forcedsellers– minimumpriceyears1&3 & forcedsellers– nominimumpriceon1/3rd of sharesineachofyears4&6

  • Currentemployeeparticipantssubmitbidstobuyshares

atapricetheyset

  • ESOTTrusteesubmitsabidtobuyshares
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SLIDE 16

NextSteps– InternalMarket

  • Marketpricebasedonnumberofsharesavailablefor

saleandbidstobuyreceived

  • Marketpriceisweightedaverageofallsuccessfulbid

prices

  • Allsuccessfulsellersreceivemarketprice
  • Allsuccessfulbidderspaybidprice
  • Marketadministratorappointedtorunthemarket

NextSteps& Timetable

  • Informationroadshow17September– 14October
  • Ballotpapersissue10October
  • Ballotcloses31October
  • Resultofballotannounced5November
  • !"
  • # $%%&
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SLIDE 17

Conclusion

  • Trusteecanonlymoveforwardwiththeapprovalof

participants

  • Believeamendmentsinbestinterestsofparticipants
  • AmendmentsendorsedbytheTrusteeBoard,the

CompanyandtheGroupofUnions

  • Urgeyoutovoteforthepackageofamendments,

allowingustoappropriate50%ofsharesandgetthe internalmarketupandrunning

  • Questions?
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SLIDE 18

ContactDetails

FionaMacGregor JohnSheerin ESOPManager ESOPOffice 43MerrionSquare 43MerrionSquare Dublin2 Dublin2 (01)7026242 (01)7027970 E&mail: esop@esb.ie Website: www.esbesop.ie

Thankyou.