Value of ESOP Shares

solas111 · 01-08-2012 9:48pm #1

How would I value ESOP shares that are about to be traded for the first time on an internal company market? The market is open for only one day per year.

Should I buy or sell?

00sully · 02-08-2012 11:50am

solas111 wrote: »

How would I value ESOP shares that are about to be traded for the first time on an internal company market? The market is open for only one day per year.

Should I buy or sell?

hah - buy or sell and at what price more interestingly

if you sell, you only get the average of all shares sold (if at all - you can be left with your entire allocation is my understanding if your auction price fails to be met by bidders)

it is certainly an "interesting" auction put forward by ESOP. I am in the same boat and am pretty clueless about what to do.

I've attached the scenario they put forward for this. Thing is, what if ESB goes public and then sells assets and the likes? The auction seems very weird to me. Can anyone offer an insight to what is going on here?

it all seems like a gamble to me. I guess we'll see on auction day. You'll know if all the shares are snapped up that something is going on. bear in mind, people like me who have left HAVE to sell within 6 years (unless it goes public). After 3 auctions our shares are automatically put up for auction and no reserve price for staff to choose so essentially they will be worthless at this time.

solas111 · 04-08-2012 12:22am

Hello 00sully,

Thanks for your reply. It is likely that I too will be moving into the Forced Sellers category by the end of the year. The amazing thing is that nobody seems to have a clue about what will happen with these ESOP shares on market day. Maybe that should not be a big surprise since the people who run the country haven’t a clue about what they’re doing from day to day.

I would imagine that the ESB ESOP model is based on something that is tried and tested elsewhere so there must be some historical data that could be used to try and make a reasonable guess about the likely market value of the shares. I cannot find anything useful on the net but maybe that there are people on this forum who have access to such data.

In my opinion ESB will without a doubt be privatised because the gob-****es in Kildare Street would sell their own mothers if the price was right or if the Troika said it was a good idea. However, the sale probably won’t happen for a while yet for several reasons:

• Few would want to pay a fair market value for the company with money being so scarce around the world.
• The Labour Party shower has to pretend that they’re looking after the interests of the unfortunates who elected them.
• ESB are going to try and bring down the earnings of their employees to the same level as their competitors, starting with a reduction of about 20% through the PEP Interlocking process.

Therefore, it is doubtful if there will be any privatisation bonus for those of us who are Forced Sellers and the only questions are should the shares be sold now or next year and at what price?

I might sell a few this year and buy a good portable engine-driven generator because I can see a lot of dark nights ahead as the fraudsters come in at the invitation of our ‘brown envelope brigade’ and turn a company with huge potential into another Eircom.

Cute Hoor · 15-08-2012 10:03pm

This may be a little simplistic, but what is the company worth, I've seen/heard €3/€4bn and others, €4bn was the value put on it last year by Colm McCarthy (for what that's worth). There are 1,979,882 units of stock (as per the annual report), so in theory that should value each share at €2.02 (I think) taking the €4bn valuation. The company value will depend of course on market conditions at any given time, and another issue you will have to deal with is the willingness of buyers (in an internal market) to pay a fair price. If you know of anybody in Eircom (a once fine company raped and pillaged imo by an eclectic mix of chancers) then they may be able to help ye. Best of luck on yere little windfall!!

Edit: Of course the units of stock above should read 1,979,882,000 and not 1,979,882 as stated above

mickey2012 · 11-09-2012 11:16pm

Hi any idea of the value per share is yet? clueless here on what price to put down, can anyone help (Sorry Cute Hoor just seen your post Thanks).

Michelle

solas111 · 11-09-2012 11:48pm

Still very much in the dark about the potential market value of the shares. A colleague reckons that it would be a bad time to sell as many of the ones who are leaving will be off-loading their shares at the first opportunity.

There was an interesting article about the ESOP shares in the Sunday Business Post about a week ago but putting a value on the shares is about as difficult as getting a sensible response from the people who run the PIP scheme.

Crimson125 · 13-09-2012 2:12pm

Hi All,

I'm helping out a relative with this at the moment given the deadline is tomorrow for sale forms.

On the FAQ on the ESOP site, it says the following :

Q21. How much are my shares worth? A: Beneficiaries are unable to sell notionally allocated shares and this means that it is not possible to provide a valuation of the shares at this time.

A formal valuation of the shares will take place at, but not before, appropriation. You should, however, be aware that the value at appropriation may not be the value you receive when the shares are sold on the internal market.

Is this information available anywhere ? I understand that the appropriation took place earlier in 2012, so that info must now be available ?

Valuing at €2.02 & a number of years of Potential future Dividends seems to make sense, though it really all is a black hole of mystery the way it works isn't it !

Crimson125 · 13-09-2012 3:29pm

Cute Hoor wrote: »

This may be a little simplistic, but what is the company worth, I've seen/heard €3/€4bn and others, €4bn was the value put on it last year by Colm McCarthy (for what that's worth). There are 1,979,882 units of stock (as per the annual report), so in theory that should value each share at €2.02 (I think) taking the €4bn valuation. The company value will depend of course on market conditions at any given time, and another issue you will have to deal with is the willingness of buyers (in an internal market) to pay a fair price. If you know of anybody in Eircom (a once fine company raped and pillaged imo by an eclectic mix of chancers) then they may be able to help ye. Best of luck on yere little windfall!!

Edit: Of course the units of stock above should read 1,979,882,000 and not 1,979,882 as stated above

it would seem that the companies performance has been increasing year on year and that McCarthy figure is based on 2009. While there were some heavy increases year on year in 06,07 and 08, some years 25%, it's not a dying market and it's safe to say there has been an increase in value since 2009 maybe ?

That would put it in the region of 3.5bn to 4.5bn / 5bn perhaps.

solas111 · 13-09-2012 5:29pm

Crimson125 wrote: »

Hi All,

I'm helping out a relative with this at the moment given the deadline is tomorrow for sale forms.

On the FAQ on the ESOP site, it says the following :

Q21. How much are my shares worth? A: Beneficiaries are unable to sell notionally allocated shares and this means that it is not possible to provide a valuation of the shares at this time.

A formal valuation of the shares will take place at, but not before, appropriation. You should, however, be aware that the value at appropriation may not be the value you receive when the shares are sold on the internal market.

Is this information available anywhere ? I understand that the appropriation took place earlier in 2012, so that info must now be available ?

Valuing at €2.02 & a number of years of Potential future Dividends seems to make sense, though it really all is a black hole of mystery the way it works isn't it !

"ESOP Appropriation
Frequently Asked Questions

Q. Is the appropriation value the same as the price I will receive when I sell my shares?

A. No. The price you receive when you sell your shares will be determined by the internal market at the time you sell.
The appropriation value does, however, become the locked-in base cost for capital gains tax (CGT) purposes, with potential CGT based on any difference between the appropriation value and the sale price."

The appropriation price is a figure that was agreed with the Revenue Commissioners for tax purposes and is probably not a good guide as to the market value of the shares.

From ESOP Trustees Ltd. 2 May 2012:
"The appropriation value agreed with Revenue is €1.05 per share. This is based on a valuation of the 5% ESOP shareholding and is not a valuation of the ESB Group."

As the ESB ESOP is not the only one in the world there must be information available from other schemes regarding the value of shares. However, I do not know where you would find such data.

wiilow74 · 21-09-2012 7:07pm

Anyone hear anything about the internal market today ie. the value that shares sold at ? Thanks

solas111 · 21-09-2012 7:18pm

wiilow74 wrote: »

Anyone hear anything about the internal market today ie. the value that shares sold at ? Thanks

The ESOP share price will not be disclosed until Monday of next week. Check the ESB website on Monday evening for details.

Comah11 · 21-09-2012 7:20pm

Got email from esop this afternoon, details will be on their website Monday.

Comah11

wiilow74 · 21-09-2012 8:06pm

Thanks .

Cute Hoor · 21-09-2012 8:21pm

Crimson125 wrote: »

it would seem that the companies performance has been increasing year on year and that McCarthy figure is based on 2009. While there were some heavy increases year on year in 06,07 and 08, some years 25%, it's not a dying market and it's safe to say there has been an increase in value since 2009 maybe ?

That would put it in the region of 3.5bn to 4.5bn / 5bn perhaps.

The former CE put a value on the company earlier on this year/late last year of €6bn (one might say he would, wouldn't he), which would value the shares at €3.05 approx.

I heard on the grapevine yesterday that the average bid price was 70c, probably just pub talk but ye will find out on Monday I guess. Good luck with them!

wiilow74 · 23-09-2012 12:53am

Cute Hoor wrote: »

The former CE put a value on the company earlier on this year/late last year of €6bn (one might say he would, wouldn't he), which would value the shares at €3.05 approx.

I heard on the grapevine yesterday that the average bid price was 70c, probably just pub talk but ye will find out on Monday I guess. Good luck with them!

Hope that turns out to be just pub talk ,still won't matter much to me , that's below my minimum price anyways .......we shall see Monday I suppose

wiilow74 · 24-09-2012 6:39pm

Checked ESOP website but no word on it about share price , anyone heard anything today ?

wiilow74 · 24-09-2012 7:22pm

Comah11 wrote: »

Got email from esop this afternoon, details will be on their website Monday.

Comah11

Nothing on ESOP website yet , did the email say they would definately give details on website today or send the details by email ? Tks

Technoprisoner · 24-09-2012 7:38pm

have to admit this system seems very very confusing. My father asked me for advice and i couldnt offer him any. I will keep an eye on this thread to see if anyone else can figure it out eventually lol

Comah11 · 24-09-2012 7:59pm

Spoke with gentleman who said there was no information today(4pm)and they would be issuing statement tomorrow. I assume it will be on website.

Technoprisoner · 24-09-2012 9:19pm

i was just thinking about this....and would it not be in the best intrest of those who can purchase shares to pay a very good price for them. that would mean the value of the shares they already have would be worth more

mickey2012 · 25-09-2012 2:42pm

I checked the ESOP Website but nothing on it yet, anymore update on the shares?

wiilow74 · 25-09-2012 2:46pm

mickey2012 wrote: »

I checked the ESOP Website but nothing on it yet, anymore update on the shares?

Emailed the ESOP crowd yesterday , got reply this morning saying that the information isn't available yet as the market hasn't been completed yet but as soon as it comes through the information will be posted on the ESOP website .

Hard to know what's going on

00sully · 25-09-2012 3:47pm

wiilow74 wrote: »

Emailed the ESOP crowd yesterday , got reply this morning saying that the information isn't available yet as the market hasn't been completed yet but as soon as it comes through the information will be posted on the ESOP website .

Hard to know what's going on

the market crashed! :pac:

I'd be surprised if anyone bidded any reasonable amount for these shares tbh it's too difficult to know how much they might be worth. There is the suspicion that they want to be snapped up for cheap from the people forced to sell though :eek:

pokerseamie · 25-09-2012 4:08pm

its not confusion its collusion

00sully · 25-09-2012 4:11pm

€1 per share my source tells me

I went in at 95c so I think mine all are shipped now

wiilow74 · 25-09-2012 5:13pm

00sully wrote: »

€1 per share my source tells me I went in at 95c so I think mine all are shipped now

Announcement is on the ESOP website now and your"source" was correct the shares sold for €1 each ........mine will be on the way back as that was below my minimum , €1 ain't a great starting price is it ? They could be less again next year

.
Good luck to any of ye that sold a few anyways

mickey2012 · 25-09-2012 6:08pm

thanks willow, crazy price

pokerseamie · 25-09-2012 6:13pm

cannot see anything on esop website about share price. what do i type in to get correct website...

waldo · 25-09-2012 6:20pm

http://www.esbesop.ie/Market%20Results%20Announcement%2025%20September%202012.pdf

"PricewaterhouseCoopers (PwC), the Internal Market Administrator, has advised the Trustee that the weighted average successful bid price was €1.00 per share (the Market Price) and this is the price that will be paid to all successful sellers"

It's a weighted average, so some bidders paid more, some less than €1.00.

pokerseamie · 25-09-2012 6:30pm

thanks waldo.....

pokerseamie · 25-09-2012 6:42pm

shares priced at what minium price will be sold. anyone know..

wiilow74 · 25-09-2012 7:09pm

pokerseamie wrote: »

shares priced at what minium price will be sold. anyone know..

Anyone who had a minimum selling price of €1 or under , their shares will sell and even if you had a minimum less than €1 you will still get €1 per share . If you didn't specify a minimum price then they will have sold for the whatever the sale price was so again those shares would sell for €1 . It's only if you're minimum sale price that you specified on the form was above €1 then you're shares will remain unsold and just come back to you to hold onto or to try sell again next year at next internal market.

pokerseamie · 25-09-2012 7:20pm

thanks willow. you are more helpful than the esop team. thanks.

solas111 · 26-09-2012 5:39pm

Well, the big secret is out at last. The shares have been valued and it looks like it was a buyer's market as the value is pretty poor. See below message from ESOP:

ESB ESOP

Internal Market Announcement

The ESOP Trustee is pleased to announce that the Internal Market held on 21
September 2012 has now been completed.
PricewaterhouseCoopers (PwC), the Internal Market Administrator, has advised the
Trustee that the weighted average successful bid price was €1.00 per share (the
Market Price) and this is the price that will be paid to all successful sellers.
Please note that participants who offered shares at a minimum price of €1.00 were
successful in selling approximately 82% of the shares they offered for sale.
PwC are currently writing to all participants who took part in the internal market,
informing them of the success, or otherwise, of their bid to buy or offer to sell shares.
Payments to successful sellers and refunds to unsuccessful bidders will be issued in
the week beginning 1 October 2012.
ESB ESOP Trustee

25 September 2012

Comah11 · 27-09-2012 2:08pm

Thanks for info. Will have to wait until next year!!!

Cute Hoor · 04-10-2012 12:01am

It's very interesting that the weighted average came out at exactly €1, a lovely round figure, not 98/99c or €1.01/€1.02. Also interesting that apparently they do not intend to publish any details of the volume of shares traded or what people paid for them (the sellers got €1 but no info apparently on the prices paid). Why all the secrecy?

wiilow74 · 04-10-2012 11:32am

Cute Hoor wrote: »

It's very interesting that the weighted average came out at exactly €1, a lovely round figure, not 98/99c or €1.01/€1.02. Also interesting that apparently they do not intend to publish any details of the volume of shares traded or what people paid for them (the sellers got €1 but no info apparently on the prices paid). Why all the secrecy?

Mmm all a bit hush hush alright , will be interesting next year to see how much interest there is for selling & buying :rolleyes:

00sully · 04-10-2012 12:50pm

Cute Hoor wrote: »

It's very interesting that the weighted average came out at exactly €1, a lovely round figure, not 98/99c or €1.01/€1.02. Also interesting that apparently they do not intend to publish any details of the volume of shares traded or what people paid for them (the sellers got €1 but no info apparently on the prices paid). Why all the secrecy?

Because ESOP probably bought most of them. I don't particularly care tho tbh

Thesafetyman · 27-10-2012 11:53pm

Its the biggest confidence trick ever executed.All the potential buyers (current staff) have to do is wait until the Forced Sellers (Pensioners) have to offer their shares with zero reserve value and hoover up the shares at 1 cent each.

convoy · 29-01-2013 3:17pm

Hi all,
Just came across this thread trying to find information on esop shares. I'm lost with it all and no info anywhere, I got my statement of appropriation this morning with a price of e1.05 per share, now I'm coming close to being gone 6 yrs from esb ,can they just wipe the shares from me?
Any info on this would be appreciated

mickey2012 · 26-06-2014 1:21am

Hi does anyone know what is the story this time round with the value of the shares and is it working the same as the last Internal Market, meaning if you were unsuccessful in selling at the last market is it an average of the price again? Can anyone help please.

wiilow74 · 26-06-2014 8:48am

mickey2012 wrote: »

Hi does anyone know what is the story this time round with the value of the shares and is it working the same as the last Internal Market, meaning if you were unsuccessful in selling at the last market is it an average of the price again? Can anyone help please.

As far as I know it's the same story again , we won't know ahead of the market what the share price will be , if you want to sell some you just have
to fill in the form that PWC sent and either put in a minimum price per share you are happy to let them go at or enter no minimum and then they would sell for whatever the share price will be on the day . They sold for €1 a share last time , hard to know what will happen this time

mickey2012 · 26-06-2014 7:18pm

Thanks Willow

Thesafetyman · 26-06-2014 9:31pm

Folks, But for the fact that the ESOP bought shares the last time out the price would have been much lower because the only other possible buyers are the current staff. All they need to do is wait in the long grass for the forced sellers shares and they can hoover up shares for 1 cent.
The ESOP are going to do the same this time and continue to use shareholders funds to buy shares.
The whole thing is a complete shambles and the Unions and ESB are standing by doing nothing until we all are dead and gone off the pitch.

Paddy6 · 27-06-2014 11:23am

Folks, a relative asked me for help on this so I done a few quick calculations to determine the share price.

Net Assets Value

As per 2013 financial results:
+ Total Assets €12,781,673,000
- Exclude Goodwill (€182,013,000)
- Total Liabilities (€8,659,184,000)
= Net Assets €3,940,476,000

Total Shares 1,979,882,000

Net assets per share €1.99

Dividend Yield Value

At stated in the chairmans statement in the annual report for 2013, ESB aim to issue 40% of all future profits as dividends.
Therefore using the 2013 profit figures as guides.

Profit Excluding Exceptional Items €414,909,000
Total Comprehensive Income €489,777,000 (Consists of once off sale of assets that are unlikely to occur in future and items which may or may not be accounted in future income statements such as foreign exchange rates)

€414,909,000 * 40% = 165,963,600 / 1,979,882,000 = €0.08383 dividend per unit of stock per year
€489,777,000 * 40% = 195,910,800 / 1,979,882,000 = €0.09895 dividend per unit of stock per year

The average Irish dividend yield in 2013 was 3.3%
CRH dividend yield in 2013 was 4%
Virdian dividend yield for 2012 was 6.6%

€0.08383 / .033 = €2.54 €0.09895 / .033 = €3.00
€0.08383 / .040 = €2.10 €0.09895 / .040 = €2.47
€0.08383 / .066 = €1.27 €0.09895 / .066 = €1.50

My views on the above:
1.Members should not accept a price lower than €1.99 (if ESB where to stop trading tomorrow and sell its assets and pay its debts, this is what the share holders would receive per share, excludes costs of selling assets etc).
2.Viridian dividend yield appears to be abnormally high. From what I could find Viridian paid dividends in 2009 and 2012 while none were paid in 2010,2011 and 2013. Therefore the average dividend yield for Viridian would be lower.

It will be interesting to see what share price will be received. It is unlikely they are going to get near €2. My view is that they represent a great investment for young employees who will be able to hold the shares for dividends. However it is most likely this group will be the ones who don't have the money to invest in the shares.

Is there any information on the financial position of the ESOP Trustee. They purchased a significant number of shares in 2012. Would they have the financial power to repeat that purchase?

Can anyone please advise me when the interim 6 months accounts to June 2014 be released.

I hope the above helps!!! do let me know if I missed anything

wiilow74 · 27-06-2014 12:28pm

Paddy6 wrote: »

Folks, a relative asked me for help on this so I done a few quick calculations to determine the share price.

Net Assets Value

As per 2013 financial results:
+ Total Assets €12,781,673,000
- Exclude Goodwill (€182,013,000)
- Total Liabilities (€8,659,184,000)
= Net Assets €3,940,476,000

Total Shares 1,979,882,000

Net assets per share €1.99

Dividend Yield Value

At stated in the chairmans statement in the annual report for 2013, ESB aim to issue 40% of all future profits as dividends.
Therefore using the 2013 profit figures as guides.

Profit Excluding Exceptional Items €414,909,000
Total Comprehensive Income €489,777,000 (Consists of once off sale of assets that are unlikely to occur in future and items which may or may not be accounted in future income statements such as foreign exchange rates)

€414,909,000 * 40% = 165,963,600 / 1,979,882,000 = €0.08383 dividend per unit of stock per year
€489,777,000 * 40% = 195,910,800 / 1,979,882,000 = €0.09895 dividend per unit of stock per year

The average Irish dividend yield in 2013 was 3.3%
CRH dividend yield in 2013 was 4%
Virdian dividend yield for 2012 was 6.6%

€0.08383 / .033 = €2.54 €0.09895 / .033 = €3.00
€0.08383 / .040 = €2.10 €0.09895 / .040 = €2.47
€0.08383 / .066 = €1.27 €0.09895 / .066 = €1.50

My views on the above:
1.Members should not accept a price lower than €1.99 (if ESB where to stop trading tomorrow and sell its assets and pay its debts, this is what the share holders would receive per share, excludes costs of selling assets etc).
2.Viridian dividend yield appears to be abnormally high. From what I could find Viridian paid dividends in 2009 and 2012 while none were paid in 2010,2011 and 2013. Therefore the average dividend yield for Viridian would be lower.

It will be interesting to see what share price will be received. It is unlikely they are going to get near €2. My view is that they represent a great investment for young employees who will be able to hold the shares for dividends. However it is most likely this group will be the ones who don't have the money to invest in the shares.

Is there any information on the financial position of the ESOP Trustee. They purchased a significant number of shares in 2012. Would they have the financial power to repeat that purchase?

Can anyone please advise me when the interim 6 months accounts to June 2014 be released.

I hope the above helps!!! do let me know if I missed anything

Wow , that's helpful stuff , more info that ESOP or PWC would ever give us ! So really if anyone is a younger member of staff ( not that flaming young ) and are not forced to sell then if they can afford to , they should try buy a few shares ?

Paddy6 · 03-07-2014 4:23pm

As a general rule of thumb, you would never sell shares for less than their net asset value (€1.99). However due to the restrictions on buyers, the market is current experiencing a liquidity problem where there is more sellers than buyers which is depressing the share price.

"the ESOP has pointed out that about 60% of the shares under the scheme are held by so-called 'leavers', with the remainder held by current ESB employees" (Irish Independent, April 2014)

The ESOT are trying to tackle this problem, they currently own 3.5% of the allocated shares after purchasing 3.6million shares in the 2012 sale and have stated they will submit a bid in the 2014 sale.

From the above, my gut feeling would be the ESOT will not let shares be sold for less than €1. In the long run, i believe the share price should rise as the ratio of buyers to sellers normalises (how long it takes and how high are the golden questions). This combined with yearly potential dividends of €.083/€.098 per share would make the shares in my view a good investment.

Regarding dividends, I read on the ESOP FAQ online that when dividends are received by the ESOT, the trustees may not forward all dividends received to the individual shareholders. As per the ESOP FAQ online "They can be used for a number of qualifying purposes, set down in legislation, including payment of administrative expenses, repaying borrowings, if any, or paid out to participants of the trust"). Does anyone know what portion of dividends received by the ESOT does normally be transferred to the employees?

Please note when i said young member, what I really meant was someone who would be able to hold onto the shares long enough to ride out the current liquidity crisis. Sorry for the confusion!!

Cute Hoor · 03-07-2014 6:38pm

My understanding is that retired staff (who are shareholders) are taking legal action to prevent the ESOT from participating in this flawed market - the ESOT are essentially using/planning to use shareholders finance to participate in the market and to prop up the share price - effectively using existing shareholders money to allow new shareholders to purchase shares for a pittance (you really couldn't make up some of this stuff)

pokerseamus · 08-07-2014 2:28am

Cute Hoor ur on the ball.. Brilliant post Willow 74..

cannellman · 01-08-2014 8:37am

Hi all, does anyone know what the share price ended up as for the shares that went on the market yesterday ? I tried looking around the net but can't seem to find anything about it.

Cheers !

Comah11 · 01-08-2014 11:39am

Hi, I have checked also this morning, no information available so far!! Think we had to wait about a week after the last sale.

Value of ESOP Shares

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