SAYE: very high demand:35,000 plus employees take up offer

[POSTMAN]

https://www.myroyalmail.com/news/2014/0 ... igh-demand" onclick="window.open(this.href);return false;

More than 35,000 employees have decided to take advantage of the SAYE scheme – significantly more than expected. This is more than twice the number of employees who chose to buy shares under the EPO at the time of our flotation.

Due to very high demand for our Save As You Earn (SAYE) scheme, we need to reduce the amount that can be saved.

Reducing savings amounts

Everyone’s application will be accepted. But, the amount anyone can save will be reduced by the same proportion, unless this reduction takes you below the minimum savings amount. In this case, your application will be reduced to the minimum savings amount.

If you chose to save the minimum amount, your application will not be reduced.

The minimum savings amounts were:

£1.25 if you are paid weekly
£5 if you are paid monthly
More information

For more information, visit http://www.myroyalmail.com/saye" onclick="window.open(this.href);return false; and watch this week’s RMTV.

[POSTMAN]

We look at next steps on SAYE

The granting of options will take place in due course. We will confirm the proportion by which we are reducing applications at this time.

Option certificates

You will receive your welcome letter and option certificate at the end of October 2014.
Your option certificate will tell you how much you will save under SAYE every month, even if you are paid weekly.
It will also tell you the number of shares you will have the opportunity to buy at the end of the savings term and how much you can buy them for.
Those taking part in SAYE will start saving in November 2014.
More information

For more information, visit http://www.myroyalmail.com/saye" onclick="window.open(this.href);return false; and watch this week’s RMTV.

[Lounge Lizard]

https://www.myroyalmail.com/news/2014/0 ... igh-demand

More than 35,000 employees have decided to take advantage of the SAYE scheme – significantly more than expected. This is more than twice the number of employees who chose to buy shares under the EPO at the time of our flotation.

Due to very high demand for our Save As You Earn (SAYE) scheme, we need to reduce the amount that can be saved.

Reducing savings amounts

Everyone’s application will be accepted. But, the amount anyone can save will be reduced by the same proportion, unless this reduction takes you below the minimum savings amount. In this case, your application will be reduced to the minimum savings amount.

If you chose to save the minimum amount, your application will not be reduced.

The minimum savings amounts were:

£1.25 if you are paid weekly
£5 if you are paid monthly
More information

For more information, visit http://www.myroyalmail.com/saye" onclick="window.open(this.href);return false; and watch this week’s RMTV.

So just over three-quarters of Royal mail employees have decided NOT to take advantage of the SAYE scheme. Common sense prevails.

[wandle]

So just over three-quarters of Royal mail employees have decided NOT to take advantage of the SAYE scheme. Common sense prevails.

You think RM still employs 140,000 people ?

Would that common sense you speak of be the same sort of common sense shown by those who refused their allocation of free shares last year ? You know, the shares that are still worth over £2850

[wandle]

UPDATE:

http://www.myroyalmail.com/saye" onclick="window.open(this.href);return false;

Save As You Earn (SAYE) options were granted on 1 October 2014. Everyone’s application has been accepted. But, there was greater demand for SAYE than the number of shares available. More than 35,000 employees have decided to take part in the scheme.

Due to this very high demand, we needed to reduce (scale back) the amount that could be saved so that everyone’s application could be accepted.

The minimum weekly (£1.25) and monthly (£5) savings amount is not being reduced. A reduction of 43% will apply to amounts above the minimum. For example, if you had applied to save £25 every week, or £100 every month, you will actually save £59 every month following the reduction.

We will reduce applications so that all employees will still save an amount every month in multiples of £1, or 25p if you are paid weekly.

Worked example

Let’s look at an example.

If you decided to save £25 every week, or £100 every month:

The reduction does not apply to the first £5 (the minimum savings amount): £100 - £95
£95 reduced by 43%: £54.15
Add back in the minimum savings amount: £54.15 + £5 = £59.15
Your savings amount will be rounded down to the nearest pound. You will save £59 from your net pay every month. This calculation will be performed automatically.

[wandle]

To clarify:

If like me, you applied for the maximum, you will now be permitted to save only £59/month, NOT £100.

This is equivalent to a £14.75/week deduction, resulting in a total savings pot at the end of the 144 weeks of £2124.

At an option price of £3.60/share, you will have the option (but not the obligation) to acquire 590 shares.

Corrected slight error in my maths, when posted previously

[Lounge Lizard]

So just over three-quarters of Royal mail employees have decided NOT to take advantage of the SAYE scheme. Common sense prevails.

You think RM still employs 140,000 people ?

Would that common sense you speak of be the same sort of common sense shown by those who refused their allocation of free shares last year ? You know, the shares that are still worth over £2850

A slight error in my maths there, "just under three-quarters of Royal mail employees" being what I meant.
And nowhere have I suggested it was "common sense" to refuse a allocation of free shares last year although I, and many others, would have refused them if they were in return for a deduction from our hard earned wages.

[clashcityrocker]

Would that common sense you speak of be the same sort of common sense shown by those who refused their allocation of free shares last year ? You know, the shares that are still worth over £2850

The refusal of the shares was borne of a belief that those shares weren't, aren't and never will be free.
The value of those shares is intrinsically linked to the attacks on our terms and conditions.
You might get £3000 by the time you cash in your shares, you might get nothing.
How much will you have lost in those years?

[CAMPINGBLUNDERER]

Well I've had my £40 monthly cut back to £24 which gives me options on 240 shares going by the Equiniti website.

[fishtank]

Would that common sense you speak of be the same sort of common sense shown by those who refused their allocation of free shares last year ? You know, the shares that are still worth over £2850

Using the phrase common sense as a pejorative completely misses the point. It is defined as the prevailing sense of the majority, not the entirety. The majority of people did not take up the SAYE offer therefore by definition that was the "common sense" decision and those who did were not using common sense.

Those who did not take up the original free share offer were in the minority therefore by definition did not share the "common sense".

So on reflection it cannot possibly be the same "common sense"....

[chrisj]

I did not apply for SAYE because I do not want to be tied in for 3 years and then have an option to buy a Royal Mail shares that is now dropping in value, and with little prospects of hitting £5.00 or even 4.50 in 3 years...

For those investing for the long-term and definitely want to stay on at RM beyond the 3 years then it is still a good bet - a tickle! And you cannot lose your money. However I think that interest rates should start to climb from next year and dividends from RM will be far less generous... So there...

So there will not be enough shares for loyal workers but they will be giving shares out like confetti to the execs - I wonder how long they have to keep those thousands of free shares in bonus for?

[wandle]

I did not apply for SAYE because I do not want to be tied in for 3 years and then have an option to buy a Royal Mail shares that is now dropping in value, and with little prospects of hitting £5.00 or even 4.50 in 3 years...

For those investing for the long-term and definitely want to stay on at RM beyond the 3 years then it is still a good bet - a tickle! And you cannot lose your money. However I think that interest rates should start to climb from next year and dividends from RM will be far less generous... So there...

So there will not be enough shares for loyal workers but they will be giving shares out like confetti to the execs - I wonder how long they have to keep those thousands of free shares in bonus for?

I applied, on the basis that all you stand to lose is a tiny amount of interest, but the upside could be a nice (little) profit.

Don't forget, before the government took on the pension deficit, RM were having to use £700m per annum of profit to shore-up the pension fund. Today, they are investing huge amounts of profit into Modernisation costs. But at some point, the spending on modernising the business will taper off, and the bottom-line profit will rise again, even if parcel revenues are flat. That should result in an ability to raise the annual dividends in an aggressive way, perhaps from the current 20p per share per annum*, to perhaps 26p/share by 2017. Of course, we don't receive dividends under SAYE, because we don't actually have an option to buy the shares until the scheme finishes. However, the chance to buy 590 shares at 360p each, will look like a bargain in three years time, in my opinion.

There's a more than reasonable chance of banking at least a 10% profit (the share price in 2017 would only need to be 396p for that to happen).

Or one could hold onto the shares, because a 26p annual dividend would represent a 7.22%pa return on the 360p/share purchase price

*the full year's dividend would have been 6.67p + 13.33p. We received only the second dividend because the flotation had not taken place at the time of the earlier 'interim' dividend

[Lounge Lizard]

I did not apply for SAYE because I do not want to be tied in for 3 years and then have an option to buy a Royal Mail shares that is now dropping in value, and with little prospects of hitting £5.00 or even 4.50 in 3 years...

For those investing for the long-term and definitely want to stay on at RM beyond the 3 years then it is still a good bet - a tickle! And you cannot lose your money. However I think that interest rates should start to climb from next year and dividends from RM will be far less generous... So there...

So there will not be enough shares for loyal workers but they will be giving shares out like confetti to the execs - I wonder how long they have to keep those thousands of free shares in bonus for?

I applied, on the basis that all you stand to lose is a tiny amount of interest, but the upside could be a nice (little) profit.

Don't forget, before the government took on the pension deficit, RM were having to use £700m per annum of profit to shore-up the pension fund. Today, they are investing huge amounts of profit into Modernisation costs. But at some point, the spending on modernising the business will taper off, and the bottom-line profit will rise again, even if parcel revenues are flat. That should result in an ability to raise the annual dividends in an aggressive way, perhaps from the current 20p per share per annum*, to perhaps 26p/share by 2017. Of course, we don't receive dividends under SAYE, because we don't actually have an option to buy the shares until the scheme finishes. However, the chance to buy 590 shares at 360p each, will look like a bargain in three years time, in my opinion.

There's a more than reasonable chance of banking at least a 10% profit (the share price in 2017 would only need to be 396p for that to happen).

Or one could hold onto the shares, because a 26p annual dividend would represent a 7.22%pa return on the 360p/share purchase price

*the full year's dividend would have been 6.67p + 13.33p. We received only the second dividend because the flotation had not taken place at the time of the earlier 'interim' dividend

The difference between "a tiny amount of interest" and "a little profit" is neither here nor there and not worth all the bother .
If you really wanted to make some money you should have had a loan from Wonga, defaulted on your repayments and had it written off.

[Jambomatt1874]

Can some explain to me in simple terms if only 35000 applied that's only a quarter of eligible employees, why is it being cut by 43%. If every employee had taken up there minimum option would that not have worked out the same??

[Spedley]

There are only 15,000,000 shares available. 43% reduction does sound quite high to me.

My basic calculations say that on average people applied for £93 per month, i.e. very few did not apply for the maximum £100.

Surprising how many posties can spare £100 per month from their wages!