Jim McDaid (Donegal North East, Fianna Fail)

I thank the Senators for accepting this. It was a matter with which I, the Minister or anyone else had no major hang-up. It is understood that the proposed amendment would have been tabled in the belief that such amendments would facilitate the issue of ESOP shares to Aer Lingus employees who have recently left the company. This is not so. The legislation does not determine who gets the shares. It is a matter for legal documentation governing the ESOP which was agreed by the unions, the company, the relevant Departments and the Revenue Commissioners. It would not be appropriate for the Department to suggest or initiate any changes to the ESOP legal documentation. However, if such changes were proposed by the trustee directors, the Department of Transport, in consultation with the Department of Finance, would endeavour to facilitate the change, if at all possible.

Following the tabling of the amendment, the issue was considered by the directors of the employee share ownership trust, ESOT, which comprises representatives of the unions and the company. The secretary to the trust has advised the Department that the following are the views of the trustee directors. First, amending the Aer Lingus Bill as proposed would not facilitate former staff in receiving shares under the ESOP. Second, former staff cannot participate in future allocations of ESOP shares because the legal documentation governing the operation of the ESOP precludes it. Third, the trustee strongly believes that any change in relation to former staff is not a matter for legislation but for the trustee, the unions, the company and the Departments in considering whether a change in the legal documentation governing the ESOP is appropriate in approving any proposed change, for these parties, the Revenue Commissioners and, potentially, the current participants. Fourth, the ESOP legal documentation which was signed by all parties in April 2003 provides that when the ESOP shares are acquired by the trustee, such shares should be nominally allocated to all beneficiaries who were employees on the relevant date. The relevant date is defined as the date on which the ESOP shares were acquired by the trustee. The trustee can amend and submit for approval any such changes. Fifth, the ESOP explanatory booklet which was sent to all prospective ESOP participants on 15 September 2003 stated that shares would only be allocated to those who signed the contract of participation and who were employees of the company on the date the shares were acquired by the ESOT. Sixth, any changes to the rules could have significant consequences, some of which may not currently be foreseen. The trustee directors must consider the interests of all beneficiaries and, given that any change of the rules would serve to dilute the interests of the current staff, it is likely that the trustee might or would require a ballot of the members to ratify the proposed change. The trustee is anxious that the Aer Lingus Bill should be enacted as soon as possible so the ESOT can subscribe for the additional shares with a view to making allocations immediately thereafter, thereby ending the accumulation of leavers without share allocations, and, notwithstanding the above, the trustee has not formed any definitive view on whether a change of the rules is appropriate.

As I understand it, Fine Gael introduced this amendment because it felt, given the Air Companies Act 1966, that the company would have the power to allocate the shares. That might well be so in an interpretation of other companies. However, it was agreed with the Attorney General that this part of the Bill was required to ensure the Air Companies Act 1966 was able to deal with the ESOT in this manner. Senator Browne's interpretation seems to have been that the company was empowered to issue shares under the Companies Act, as all companies can. However, there was a tie to Aer Lingus in the Air Companies Act 1966 which did not apply to other companies and which meant the company would not be able to do this. This part of the Bill is to clear the path for it, as was agreed with the Attorney General. Senator Browne's amendment applies to this section of the Bill whereas that of Senators O'Toole and Ross applies to section 7.