Controversy over stock option programme for Stora Enso managers

The major Swedish-Finnish forestry products company, Stora Enso, has offered 200 "key employees" a stock option programme, the details of which were outlined at the end of August 1999. The announcement is reported to have angered the firm's other workers, as negotiations on a profit-sharing system for all 40,000 employees have stagnated.

The board of directors of the Finnish-Swedish forestry products (wood, paper etc) group Stora Enso decided in April 1999 to establish a stock option programme for some employees. The final details of the programme were presented in August 1999, and it has been revealed that it covers about 200 "key employees", that is managers and other senior staff, out of a total workforce of some 40,000. The participants in the programme have been guaranteed seven-year options that may be exercised from 15 July 2002. The options are so-called "synthetic options" that can be exercised against cash. The price is EUR 11.75 per share and the options are not transferable and expire if the employee leaves the company.

Stora Enso was formed in late 1998 by a merger of the Swedish Stora and Finnish Enso (SE9904157N). The workers at Stora have had a profit-sharing system in place since 1998, but it has not worked out very well for them - there was no distribution of profits in 1998, and there is no hope of one for 1999 either. It was in this context that the new option programme was presented, and this thus caused some irritation among workers, according to Anders Wiklund, a paper worker at Stora Enso and chair of a local branch of the Swedish Paper Workers' Union (Svensk Pappersindustriarbetareförbundet, Pappers). Negotiations had begun over a more generous profit-sharing system than the current scheme - under which a yearly return of 13% on the invested capital is required before any profit above this limit may be distributed to workers - have stalled for the time being. "But hopefully, the events around the option programme may give the negotiations a fresh start", Mr Wiklund says. The presentation of the programme has also been criticised in Finland, among others by the Finnish government.

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