ESOPS in a CHALLENGING ECONOMIC ENVIRONMENT

1
ESOPS in a CHALLENGING ECONOMIC ENVIRONMENT

• Bernard Daly
• ICC ESOP Trustee Ltd.

2
Global Financial Crisis

• Deregulation of financial markets in 1990s gave
  rise to global financial markets
• Key role of markets in how the economy and
  society operate
• Current crisis is a blow for EFI generally and
  ESOPs in particular

3
Questions from Employees ?

• Where were the regulators ?
• Where were the rating agencies ?
• Where were the auditors ?
• Where were the institutional shareholders ?
• Corporate Governance failure ?
• Concern for Future Employee participation?
• Need for IPSA to speak out

4
Nature of Irish ESOPS

• 1997 legislation
• Different to other Share Schemes
• Collective in nature ability to borrow
• Medium to long term perspective
• Controlled by employee representatives
• Financed by employees
• Employee and leaver beneficiaries

5
Role of ESOP Trustee

• Act in the best interests of the beneficiaries at
  all times similar terms
• The Trustee has a duty to secure and protect the
  Trust Assets
• Captive investor ie can only buy the one share
• Company Board representation

6
Different Issues for Irish ESOPS

• Financial versus strategic objectives
• Strategic and Distribution Issues
• Conflicts of Interest
• Recognising and managing conflict is key
• Treating beneficiaries on similar terms
• Managing the assets in accordance with Trust Deed

7
Future

• Social Partnership needed in 1980s and 1990s and
  is now needed more than ever
• ESOPs have delivered transformation in commercial
  Semi-State sector
• ESOPs support partnership but radical change in
  mindset required on all sides
• Application to private sector in difficult times
  ?