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Chairman leaves Hydro amid options controversy

Jan Reinås has resigned as chairman of Norsk Hydro, the oil and aluminium group part-owned by the Norwegian government, over the closure of the company’s stock option programme.

The stock option programme was terminated in July in, the board said, accordance with the Norwegian government’s 2006 policy that state-owned companies should stop issuing options to management.

According to media reports the termination of the programme meant 35 executives participating in the scheme would receive a total payout of NKr210m ($36.5m) to compensate them for the loss of options (Financial Times, 6 August). This provoked an outcry in Norway, which triggered Reinås’ resignation.

However, Norsk chief executive Eivind Reiten has proposed to voluntarily reduce the agreed payment he will receive for options granted in 2005 and 2006 by 50%. Other board members have said they are willing to relinquish 30% of the market value attached to stock options allocated in 2005 and 2006.

The board also received the backing of Norsk’s corporate assembly, which gave the board a vote of confidence and ruled its decision to terminate the scheme was based on its best business judgement.

September 2007