Bank of Bermuda executives who received stock options last year could reap millions of dollars if the bank eventually lists on an overseas stock exchange.

While the bank's 2,000 shareholders -- about 80 percent are Bermudian -- also stand to benefit, critics question the motives behind the push for an exemption from the Island's ownership rules and a secondary listing. See related story on Page 31 However in answer to critics who say the drive to list overseas is an attempt to make a quick buck, a bank spokesman said the details of when executives can exercise their options show that's not the case.

"If one reads the terms of the plan, one can see that this is not an attempt to make a quick buck,'' chief financial officer Edward Gomez said.

Share options give the holders a right to buy shares in a company at some future date at a set price. Share options are usually given to executives as a performance incentive. When a company's stock price rises beyond the set price the executives gain the difference when they exercise the option.

Options are also seen as a means of keeping executive stakeholders focused on the business.

The decision to grant share options to top executives was made last year and approved at the company's annual general meeting June 12. The options were granted at the price at that time -- $20.

By the time the bank's board of directors made a public announcement on June 26 that it had decided to "explore'' the possibility of a secondary listing, the stock had risen to $25.

As at June 30 last year a total of 725,000 options had been granted to key executives at a market price of $20. Bank of Bermuda stock traded at $36.50 yesterday. At December 31 the number had increased to 745,000.

However controls in place prevent executives from exercising their options immediately and then selling the shares to cash in on the price difference.

All the options have ten year terms after which they expire.

They have a staggered vesting period of four years in which 25 percent of the options granted become exercisable one each of the four anniversaries of the grant date.

Another control limits executive officers from cashing in their holdings. Any shares acquired under the option plan must be held until they are worth at least three times the annual salary of the individual executive officer.

Still the potential benefit from an overseas listing could reap rewards for the executive. Through comparison with similar banks, the executives believe increased liquidity could boost the stock to the mid-$40 range, and perhaps even higher.

At a potential price of $45, the 725,000 options originally granted would give the executives shares worth $32.6 million on the market in four year's time.

They would collectively have bought the shares for $14.5 million yielding a gain of $18.1 million if they were able to sell them immediately.

BUSINESS BUC