CEZ informed yesterday that four current board members Martin Roman, Jiri Borovec, Daniel Benes, Tomas Pleskac and one former board member Alan Svoboda will execute part of their stock option plan in a short period of time. Current board members will exercise up to 25% of the quota, total of 300,000 shares and plan to place them them on the market, while Alan Svoboda will exercise all his quota (300,000 shares) due to conditions of stock option program but plans to hold unspecified part of them. CEZ stated that the reason behind is that share price reached CZK 1,000 and it is moment for some kind of bonus also for the management.
Our view:
CEZ’s stock option plan, which is standard motivation tool, is in place since 2001 and has been revised in May 2006 due to strong apprecation of CEZ’s share price. New board members, joining board after May 2006 are limited by 100% appraciation and are allowed to participate in the program only after 3 years. We expect some pressure on the share price in upcoming days as execution of part of stock option plan may be viewed negatively by some investors. Nonetheless we reiterate our Buy recommendation with fair value of CZK 1,095.