Bank directors' holdings suffer as shares slide

They might not get much sympathy from shareholders who have seen the value of their shares plummet, but directors of AIB and Bank of Ireland are among those who have suffered badly from the collapse, with the value of their shares and share options plunging.

A year ago, when AIB shares reached their peak of €18.15 (£14.29) on foot of takeover speculation, chief executive Mr Tom Mulcahy owned shares worth £3.5 million (€4.44 million) and share options which had a paper value of £5.9 million.

Since then, the value of his shares has fallen to £1.8 million while the paper value of his options is now £2.2 million. The combined value of Mr Mulcahy's shares and options have fallen by 57.4 per cent in that period.

Another AIB director, Mr Michael Buckley, has seen the value of his shares slip to £500,000 while the paper value of his share options has fallen from nearly £3 million to less than £1 million.

The more dramatic fall in the value of Mr Buckley's options is because the average price at which he can exercise these options is €4.93 a share while Mr Mulcahy's average option price is €4.09. AIB finance director Mr Kevin Kelly made one timely investment in early 1999 when he bought 50,000 shares at an option price of €1.98 and then sold them into the market at €15.92 each to make a clear profit of £550,000.

His remaining options, however, have fallen in value from £3.5 million to £1.4 million, while his shares are now worth £487,000 compared to more than £950,000 when the shares were at their peak.

Bank of Ireland's directors have not suffered to quite the same degree, given that its shares have not performed quite as badly as AIB, but its chief executive Mr Maurice Keane has seen the value of his shares fall from more than £3.1 million to £2 million, while the paper value of his options has plunged from £1.3 million to just £300,000.

Another executive director, Mr Pat McDowell, has had his shareholding fall in value from £670,000 to £430,000, but his options have tumbled in value.

The two recently-appointed Bank of Ireland directors, Mr Paul Dalton and Mr Brian Goggin, however, may find themselves unwitting beneficiaries of the slump in the bank's share price.

When they are awarded share options, these will be based on the price in the market at the time. The lower the option price, the greater the potential gain.