Protests force SelecTV to ditch option scheme

THE INDEPENDENT television producer SelecTV, whose programmes include Lovejoy and Birds of a Feather, has been forced to abandon a share option scheme because of protests from institutional shareholders.

The scheme would have given the directors the right to buy 12 million shares, or 8.9 per cent, at 17p. The options were granted last month, when the group announced a one-for-four rights issue to raise pounds 4.2m. Michael Buckley, chairman, and Allan McKeown, managing director - who own 6 million and 10 million shares respectively - are not taking up their rights but would have been granted options over more than 5 million shares each.

The group already has a share option scheme that gives the directors the right to buy 15.2 million shares. If all these had been exercised, the directors would have ended up with almost a quarter of the group.

Yesterday, the group said: 'Following discussions with certain of the group's institutional shareholders, the proposed beneficiaries have decided that they would not exercise any entitlement to take up these options.'

The main shareholders include HSBC Holdings, with 10.07 per cent, Standard Life with 9.11 per cent and Schroder Investment Management with 3.97 per cent.

A number of these shareholders indicated that they intended to vote against the proposal. One said: 'I was concerned about the award of that scale of options, and the fact that they were proposed during a rights issue.'

He also criticised the company for granting the options at the current share price, as such schemes are supposed to be used to reward directors' performance.

Another shareholder questioned the reason for the issue, which is to pay for pounds 3.4m of loan notes in Meridian Broadcasting, in which SelecTV has a 15 per cent stake. 'We do not make equity investment for companies to buy loan notes with highly-rated paper.'

Mr Buckley said: 'We decided that the timing of the proposal was inappropriate given that there was a rights issue, so it has been shelved for the time being.'

Guidelines from the Association of British Insurers suggest that up to 10 per cent of the capital can be granted in options over a 10-year period, but only half of these should be to directors.