The Bank of Bermuda?s top officers reportedly hold 1.2 million in stock options, and between the six of them could make a profit of $20.4 million if they were to exercise those options at the time of the bank?s sale to multinational banking giant HSBC.

Although the options that senior executives hold ? and which are granted as part of their annual compensation package ? are scheduled to vest at different times they would all become fully exercisable if the bank?s proposed sale to the multinational banking giant HSBC was to go through. The possible sale was announced on October 28, but is still pending shareholder and regulatory approval.

The bank?s top six officers ? CEO Henry Smith, COO Philip Butterfield, chief financial officer Ed Gomez, head of private client services Wayne Chapman, head of banking services Michael Collins and head of the bank?s fund administration arm, Global Fund Services, Paul Smith ? are the ones who were collectively reported as holding the 1.2 million in outstanding option grants.

Those options, details of which were revealed in the bank?s latest annual report (for 2002, issued June, 2003), were granted under two separate plans ? the executive share option plan set up in 1997 and the share option plan 2000.

Some of the options were due to become vested in 2003, but the 1.2 million in options is as of December 31, 2002 and does not take into account that some options could have been exercised in the last year.

Options are given to senior executives and management as part of their overall compensation plan, and the granting of those options was said to be tied to performance.

But the profits that could be garnered from the options has been a point of anger for some bank staff disgruntled with the terms of the HSBC sale, while others ? including senior executives ? have said they do not see the amount of money that could be earned on the options as an issue.

One staff member said options were a standard element in executive compensation packages at most major corporations, and that the bank?s senior officers were entitled to the proceeds as a part of their compensation for running the bank.

Proxy materials revealed the total number of options outstanding on an aggregate basis as of 24 November, 2003, which is the record date for the bank?s February 16 vote on the HSBC sale.

Directors of the bank held 112,552 shares with an average exercise price of $35.59 while senior management ? which is understood to comprise the bank?s six senior executives and 33 members of senior management ? held 2.4 million in options. Employees of the bank held 3.97 million in options, with that number including the senior executive and management?s 2. 4 million in options.

The average exercise price for all of the outstanding options was $40.57.

The bank?s senior executives, with the exception of Ed Gomez, are also due to be paid nearly $11 million in cash and investments, under the terms of the HSBC sale if they cut 150 jobs in the first year after the acquisition, while retaining 70 percent of those staff defined as ?key?.

However, Mr. Smith?s bonus payment is not tied to the targets, and is to be paid when he leaves the bank which will reportedly be within the first year of HSBC?s takeover.