Molson Drops Proposed Stock Option Voting Procedure

October 15, 2004 ( - Quashing a plan that would allow employees to vote with stock options for the proposed merger with Coors, Molson Inc. has bowed to shareholder pressure and in the process drawn praise from minority stockholders.

Although a completed deal has not yet been finalized, Molson has backed off its proposition that would have given the company 3% more votes potentially in favor of the merger with Adolph Coors Co. Investors had argued that the plan to allow stock option voting by employees amounted to a conflict of interest.

In lieu of the former plan, Molson says that it will now only allow option holders to vote on whether they wish to convert their Molson options into Molson Coors options. This vote will not effect the merger, Molson said, according to Reuters.

On top of the stock option decision, Molson has also given up on a plan to reward executives with substantial bonuses if the merger goes through, Reuters reported.

For the merger to succeed, it must garner the approval of two-thirds of Molson’s class A nonvoting and class B voting stocks, as well as each class of Coors shareholders. Molson expects to hold a shareholder vote in the middle of December, and hopes to close the deal by the end of the year.

“They did what they had to do to bring some shareholders on side in terms of reversing the option voting capacity and the change of control payment,” Bill Chisholm, an analyst with Dundee Securities Corp, told Reuters. “Having option holders vote is stretching the limits of fairness I think and (the compensation provision) was pretty generous.”

Molson’s largest shareholders had expressed concern regarding both the proposed stock options voting and executive bonus system. The company’s largest investor, Caisse de depot et placement du Quebec, expressed its appreciation of Molson’s moves. In a letter to Molson, the company asserted that “The Caisse would like to express its appreciation of the attention you have given to our concerns and the diligence with which you have acted.”