Following to information that police started to investigate some members of supervisory board in connection with option program, CEZ issued press release. The option program as the standard motivation tool was approved by AGM in 2001. The program was designed by prestigious law offices according to world standards and Czech law. CEZ holds references from law authorities which confirm the harmony with a law and it is ready to cooperate on the investigation.
Our view:
Option plan was introduced in 2001 as a standard motivation tool. The plan 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 see news as neutral for today’s trading and reiterate our Buy rating with the fair value of CZK 1,095 per share.