Staff to own 10% of privatised Royal Mail

[POSTMAN]

http://www.ft.com/cms/s/0/fdcb3470-461c ... z2FIqO37YF" onclick="window.open(this.href);return false;

Staff to own 10% of privatised Royal Mail

The coalition is pressing ahead with plans for Royal Mail’s 150,000 staff to own at least 10 per cent of the business as it accelerates preparations to privatise the state-owned postal operator.

Michael Fallon, the Conservative business minister, is weighing options such as a John Lewis-style trust or individual shareholdings for employees as part of the sell-off, scheduled for 2013-14.



It would be the largest employee share scheme of any privatisation for 25 years, second only to that of British Telecom in 1984.

Employee share schemes are often seen as a Liberal Democrat enthusiam, but Mr Fallon praised Ed Davey, a LibDem predecessor, for including the plan in last year’s postal services act.

“Working through all the options for a share scheme for Royal Mail employees is right at the top of my in-tray and I have asked the Communication Workers Union [the main postal union] for their views,” Mr Fallon said. The employees were central to the company’s future success, he said.

“We are committed to injecting private capital into Royal Mail to help ensure the ongoing viability of the company. Momentum will continue to build as we put all of the building blocks in place. Doing the right deal for employees and the taxpayer will shape my thinking.”

Billy Hayes, CWU general secretary, said his union remains opposed to privatisation of Royal Mail, but “if privatisation happens we believe the biggest possible chunk of shares should be controlled by employees”.

He said any form of employee ownership should be set up as a collective trust with trade unions acting on behalf of employees. “There should be no internal or individual trading of shares,” he said. “Rather than dividends the trust would provide options for employees to improve long-term benefits such as pensions.”

If Mr Fallon opts for individual ownership, he will need to decide whether the shares are offered free or at a discount. He is keen to avoid “stagging” of shares by staff or the public – selling them for a quick profit, as happened in some of the 1980s privatisations.

Royal Mail on Friday confirmed Barclays as its adviser and brought in Bank of America Merrill Lynch and Goldman Sachs to provide extra support in sounding out investors. UBS is advising the government.

A successful sale is by no means assured, despite the passing of the act. Much will depend on the state of markets and Royal Mail’s progress in modernisation.

The postal operator is thought likely to be worth up to £2bn-£3bn if floated on the stock exchange, which would put it into the FTSE 100 and make it the largest privatisation since the government sold the railways in the 1990s.

Other options include an early sale of a minority stake to an investor or group of investors – probably private equity firms – ahead of a flotation.

CVC Capital Partners, which has stakes in the Belgian and Danish postal services, ended up the only bidder when the previous government tried to sell a minority stake in 2009.

Mr Fallon has written to MPs to say the government intends to introduce private capital during 2013-14, “but I remain open-minded as to the structure and exact timing”.

Royal Mail’s operating profits rose from £12m to £144m for the six months to September, fuelled by the booming parcels business as consumers shop online. It is reshaping its network of mail centres and delivery offices to make it easier to deliver parcels, and must reach a new pay and working practices deal with the CWU by next spring.

[hubbahubba]

So Billy,why exactly would i want the union to act on my behalf if there were to be shares offered to us as part of a stockmarket float?
Haven't exactly covered yourself in glory on the workfront of late have you?

[knackeredneedadayoff]

guaranteed not free shares.the gravy boat is only for a select few.

[TrueBlueTerrier]

Billy Hayes, CWU general secretary, said his union remains opposed to privatisation of Royal Mail, but “if privatisation happens we believe the biggest possible chunk of shares should be controlled by employees”.

He said any form of employee ownership should be set up as a collective trust with trade unions acting on behalf of employees.

Those 2 statements surely are mutually incompatible.

Also what about non union members what rights would they have after all a closed shop is illegal so how could the Union act on their behalf. Shares would not be covered

“There should be no internal or individual trading of shares,” he said. “Rather than dividends the trust would provide options for employees to improve long-term benefits such as pensions.”

Excuse me I don't remember a consultative ballot, did I miss it.

[teesdale]

No involvment of the CWU in any shares awarded to Royal Mail employees. Imagine them administering dividends to provide pension benefits etc. Whats wrong with stagging in a free market economy. They want this type of economy. Ill take shares as compensation for Royal Mails bullying culture which no one seems to be able to get rid of.

[fishtank]

If you take just for instance the proposed boycott of DSA mail...
A move like that would probably have a negative affect on the company's share price...
As would industrial action...

If the CWU was playing "guardian" to our shareholding how could they possibly square that circle?
Asking members to lose pay directly over industrial action and lose again over reduced "share dividends" is not going to make securing a strike ballot easy.

If members in one area were involved in industrial action and that was costing us business how would "shareholders" in other areas feel?

If one area of the business was losing money hand over fist like RM Letters and you worked in say Parcelforce how would you feel about your "shareholding" being devalued.

If job cuts were on the cards in the loss making part of the business would you support your colleagues or start looking at the FTSE to see how your shares are doing?

In every single case i can think of where employees were encouraged to take a stake in the company it has reduced the effectiveness of the union involved.
If the union actually takes an active role as some kind of Hedge Fund Manager in my opinion it will be sealing it's own fate and probably deserves that fate.

[NWpostie]

If it goes ahead the Government is killing the golden goose, once a source of income for the Government year on year, they are giving this away for a one off payment ? madness


If past experience of privatisation is anything to go by, I guarantee we will end up like Nederland post http://www.guardian.co.uk/uk/2011/apr/2 ... s-delivery" onclick="window.open(this.href);return false;

Should that happen it would be well to take redundancy and look for something else once TUPE runs out.