Generous Fortum stock options cause indignation in Sweden

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Generous stock option programmes are making millionaires of managers of the Finnish energy giant Fortum. The Swedish newspaper Dagens Nyheter has calculated that about three billion Swedish krona (about EUR 330 million) are tied up in options for 350 management-level employees of Fortum.
      As Fortum’s largest shareholder is the Finnish state, Finnish taxpayers are also contributing to the stock option bonanza.
      The largest slice of the Fortum stock option pie has gone to CEO Mikael Lilius, who stands to receive about EUR 9 million. The windfall is the result of the sharp rise in the Fortum share price, which has nearly tripled since 2000.
     
News of the lucrative benefits has angered Swedish consumers, who have long been complaining about the high cost of electricity. Energy companies are currently somewhat unpopular in Sweden anyway, as thousands of households have been without electricity after recent heavy storms. However, most Fortum customers in Sweden managed to get through the tempests with fairly little inconvenience.
      The Internet version of the Swedish financial daily Dagens Industri wrote on Tuesday that the Fortum stock option programme is further evidence of greed on the part of the company’s management, and of misuse of its monopoly position.
      Carola Teir-Lehtinen, Fortum’s head of communications, confirms the calculations by the Swedish newspaper as correct, provided that the share price remains at the present level.
      She adds that nobody could have imagined that the options would reach their present value when the incentive programme was drafted. She also says that the rules of the option programme are strict, and that they have been examined by the Finnish Ministry for Trade and Industry.
      "Nobody could have guessed that the value of the company would triple from when the programme was decided", Teir-Lehtinen points out.
     
While the greatest beneficiaries of the rise in the value of Fortum stock are a few hundred management figures, Teir-Lehtinen notes that all 13,000 employees benefit from productivity incentives.


Links:
  Fortum web site

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