EADS Chief Proposes Banning Stock Options
The head of European aerospace group EADS said in remarks published on Tuesday he would propose scrapping the company's management stock option system amid an ongoing insider trading investigation.
Louis Gallois repeated in an interview with daily Le Monde that managers who sold stock under the system should be presumed innocent of any insider trading unless proved otherwise. But he criticised the stock option system itself as a "lottery."
"I will propose to the board that we ban this system totally," Gallois said in Le Monde's edition dated Oct. 10.
The system, which Gallois has criticized in the past, could be replaced by issuing free shares as an alternative means of boosting compensation, he said.
French stock market regulators are investigating whether executives and industrial shareholders who exercised options or sold stock in early 2006 knew about worsening delays to the A380 superjumbo, which hit the company's share price in June 2006.
The group's core shareholders and several of the executives named in a leaked preliminary document have denied wrongdoing.
The turmoil surrounding EADS has dominated the political agenda in France in the week since the AMF regulator's preliminary report to prosecutors was leaked in Le Figaro.
EADS has condemned the publication of the report and written to the AMF demanding to see a copy.
In parliament, the finance commission of the lower National Assembly began a probe into the purchase of a 2.25% stake in EADS by state bank CDC from industrial shareholder Lagardere in April 2006. The bank lost substantial sums on the deal.
The finance minister of the time has denied putting pressure on CDC to buy the shares.
EADS Share Lose Value
EADS shares lost a quarter of their value in June 2006 after the disclosure of worsening delays to the A380 superjumbo, the world's largest airliner being developed by subsidiary Airbus.
The delays coupled with a slide in the value of the dollar pushed Airbus into a loss last year and prompted it to announce 10,000 job cuts and start auctioning off factories.
Gallois said the dollar was undervalued but ruled out any revisions to so-called Power8 restructuring plans involving the removal or outsourcing of 10,000 jobs at planemaker subsidiary Airbus.
The October 2006 plan was based on a euro at $1.35 but the European currency has since risen above $1.40.
"I see I'm not the only one now to believe that the dollar has fallen too far and that it threatens the competitiveness of our industry. That's progress," Gallois was quoted as saying.
In a blow to the restructuring plans, German industrial group Voith said on Tuesday it had withdrawn bids for Airbus's German plants because it could not make them viable.
"We respect their decision and though we regret it, talks are continuing with the other two parties for each (German) site and are at an advanced stage," an Airbus spokeswoman said.
Industry officials say the other two bidders for the main German plants being sold are Spirit Aerosystems of the United States and OHB unit MT Aerospace of Germany.