Following to information that members of board decided to exercise up to 25% of its option program, CEZ’s CEO Martin Roman stated in interview for HN Daily: “Company plans to become the energy leader in CEE and SEE regions and there is lot of opportunities for further growth.” CEZ stated that the reason behind is that share price reached milestone CZK 1,000 and it is moment for some kind of bonus also for the management. Note that 4 members of the board and head of sales sell up to 600,000 shares.
Separately: According to HN Daily there is police investigation concerning CEZ’s option program. Police plans to proceed some former state officials which benefiting from mentioned option program.
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 appreciation of CEZ’s share price. New board members, joining board after May 2006 are limited by 100% appreciation 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.