OREANDA-NEWS. October 01, 2010. AvtoVAZ's board of directors will soon be considering its option program for its managers. According to the report, AvtoVAZ's senior management could be allocated about 2%-3% of the company's shares. A board meeting is scheduled for late October, but the agenda of the meeting has not yet been announced, reported the press-centre of OTKRITIE Financial Corporation.

AvtoVAZ board member Sergei Skvortsov, who is managing director of Troika Dialog, said that RAO UES's option program will be used as an example for AvtoVAZ. Interfax suggested that the shares for the stock options will be purchased from the market, and the program will be financed through bank loans. The management will be granted the right to exercise the stock options by 2012-2016.

View: We take the news as positive for the company's shares, but given that the shares of AvtoVAZ have begun to rise since the end of August - and its price more than doubled in three weeks - it is currently very risky to purchase AvtoVAZ shares in the expectation of further growth.

Valuation: We believe that the company's stock is significantly overvalued, both relative to its peers and fundamentally. AvtoVAZ is trading at a 2011 EV/EBITDA of 15.4, a groundbreaking premium to its global peers of 130%.