An estimated 4,000 Eircom shareholders turned up at yesterday's annual general meeting to give their board a roasting. Chairman Mr Ray MacSharry and the board had little option but to grin and bear the invective that came flying fast and furious. The small shareholders let off steam, but the reality is that they accomplished little.
Those same 4,000 shareholders exited the RDS Main Hall with little reassurance that they are ever going to break even on their investment and, rightly or wrongly, believe just as fervently that when it comes to public company priorities, shareholders are bottom of the pecking order.
Time and time again, Mr MacSharry repeated the mantra that the controversial long-term incentive scheme for Eircom's senior management was perfectly in keeping with the demands of the Irish Association of Investment Managers and places severe demands before the 400 executives involved even qualify for share options.
But Eircom's half-million small shareholders couldn't care less what an unelected lobbying group like the IAIM thinks about the scheme, or what targets have to be reached before any of the 400 managers qualifies for options. All they know is that they have lost more than 30 per cent of the money they ploughed into Eircom, in a blaze of hype, while two executive directors have received large bonuses and managers can now get options at well below the flotation price.
Eircom should have shown more empathy with its small shareholders and, at the very least, put the incentive scheme on hold for another year or priced the options at the €3.90 (£3.07) flotation price. By pricing the options at €3.00 or the market price, whichever is the higher, the Eircom board seems to have tacitly accepted that the share price is not going to recover to the €3.90 that would at least allow shareholders to break even on their investment.
Mr MacSharry also made great play of the demands imposed on the managers before they get an option over a single share - earnings per share have to rise by inflation plus 5 per cent. Certainly, that is a demanding target and, at current inflation rates, would mean earnings per share would have to rise by more than 11 per cent. But so it should be.
Just how attainable those targets are is open to question, with the ESOP trust that manages the 14.9 per cent stake held by Eircom's staff telling yesterday's meeting that the requirement for capital investment in broadband and third-generation mobile phones means that earnings will actually drop, and that the inflation plus 5 per cent target "will not be cleared for the foreseeable future".
The ESOP trust did the right thing, but for the wrong reason, by throwing its 14.9 per cent against the long-term incentive scheme. The trustee's objection is apparently partly based on an assumption that the targets are unattainable and not that it provides potentially lucrative options for management at a time when small shareholders are feeling pain. Very few people or organisations emerge from the Eircom debacle with any great credit and much of the blame for the losses now being endured by shareholders lies at the feet of a Government that ignored Eircom's pleas, as well as those of one of the Government's own advisers, that €3.90 was too high a flotation price.
Eircom chief executive Mr Alfie Kane also emerged with little credit. Maybe he was caught on the hop on morning radio when he said the flotation price was too high, but it was a serious error of judgment that only undermined a share price that was already under pressure from Eircom's so-called strategic partners, KPN and Telia.
What KPN and Telia have actually contributed to Eircom since they took their 35 per cent stake is unclear. There is no evidence that they have added much to Eircom's strategy.
KPN and Telia's handling of the sale of their Eircom shareholdings has been shambolic. If the two companies ran their Dutch and Swedish telecoms business in anything like the way they have managed their Eircom involvement, then one can only pity Dutch and Swedish telecom users.
The Minister for Public Enterprise, Ms O'Rourke, has tried to wash her hands of the Eircom debacle, but it was the Government that embarked on a campaign that sold Eircom as the next best thing to a sure bet, and which is now faced with one-seventh of the population disillusioned with the stock market.
Ms O'Rourke is still intent on floating Aer Lingus early next year, with the likes of Aer Rianta and Coillte also mooted as potential candidates. Given the disillusionment among shareholders at the Eircom a.g.m. - and undoubtedly shared by the 480,000 shareholders who didn't attend - small investors are unlikely to be queuing for the next batch of Government-owned shares.