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Share option scheme scuppered T-Online deal

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Share option friction and press leaks all played a part in the collapse of T-Online's £6 billion bid for Freeserve, the Dixons ISP boss claims.

John Pluthero, Freeserve's 38-year-old CEO, told The Telegraph there were "a whole bunch" of reasons the deal bombed. Chief issue seems to have been Freeserve's share option scheme. All Freeserve staff have options equivalent to one year's salary, with senior execs holding a lot more. In total, the company has issued 7.5 million options - worth around £45 million at T-Online's bid price.

But there was no way for Freeserve staff to transfer these options into T-Online stock as its exec have no such incentive scheme and are paid straight salaries.

Secondly, Pluthero blamed the media and interference from the parent companies - Dixons and Deutsche Telecom. "The degree of press comment made things more difficult and the timetable was too demanding," he told The Torygraph..

But Pluthero and bankers seemed to agree that the deal was far from dead. "This thing will move to some sort of resolution and it is most probably going to be with T-Online," said one adviser. ®

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