Bezeq flinches first, freezes options plan

The board of Bezeq, the Israel Communications Company, voted Thursday to cancel its options plan under pressure from the Israel Securities Authority and the public. The NIS 111 million plan, approved just three weeks ago, involves options for 40 executives. The board plans to inform the stock market formally this morning.

Sources believe the plan that will eventually be approved will cut the amount of options in half. Likewise, the company is expected to amend the plan on several points in line with Securities Authority demands. Bezeq declined to comment on this report.

Securities Authority officials also called Bezeq to task over the scope of the benefits, which they claim is greater than NIS 111 million but not reflected in the plan.

The atmosphere at Bezeq was very dire last week in the wake of the Securities Authority's ruling that the approval process of the options plan was faulty. The authority hinted in the questions it submitted to the Bezeq board that based on minutes of the meeting in which the plan was approved, the approval process raised grave questions. A market executive also told TheMarker, "The problem isn't in what was said in the minutes but rather what was not said."

The Bezeq board is liable to be exposed to a lawsuit by shareholders regarding the approval of the options plan.

The Securities Authority allowed Bezeq to supply it by tomorrow with explanations regarding the plan's approval. Bezeq was asked for clarifications and to supply additional details on the approval of the exceptional plan. Questions included: Who decided on the compensation mechanism; how were calculations made to arrive at the final sum; why the board didn't demand as much information from Bezeq about compensation mechanisms as other boards do from other companies; and why the board members were not asked to justify the plan's approval?

The plan would allocate up to 65 million options in company shares, constituting about 2.5 percent of its issued capital. The price of realizing options would be at least 20 percent below market price.

Among those receiving compensation are the chair Dov Weissglas (around NIS 6 million) and CEO Jacob Gelbard (around NIS 42 million). The rest of the executive directors at Bezeq, including managers of its subsidiaries, were designated to receive options.