Royal Mail privatisation is landmark for employee ownership

[TrueBlueTerrier]

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The privatisation of Royal Mail will see shares worth up to £2,000 awarded to each of its employees.

Vince Cable, business secretary, confirmed that Royal Mail staff would be given 10% of the organisation’s shares after its flotation on the London Stock Exchange, planned for later this year.

The government has hailed the move as the second biggest employee share scheme in 30 years in terms of the number of workers who will benefit, second only to the privatisation of British Telecom in 1984.

The percentage of shares being allocated to staff is also the highest for an employer with more than 100,000 employees.

Rolls-Royce, which was privatised in 1987, gave 10% of its shares to employees and British Airways, which went private in 1987, awarded 9.5% of its shares to employees, but both had fewer than 50,000 staff.

Iain Hasdell, chief executive of the Employee Ownership Association (EOA), said: “This creates an opportunity to develop a more inclusive and engaged working environment.”

The government intends to award the free shares under a tax-advantaged share incentive plan (Sip) and Royal Mail will communicate more details to its employees in the coming months.

Eligible Royal Mail staff will automatically receive an equal number of shares, irrespective of their grade, and there will be a pro-rata allocation for part-time employees.

Employees will also be able to opt out of the scheme if they wish and have the option to buy extra shares through the retail offer, as well as be given priority when shares are allocated.

Cable said the scheme, which will see employees’ shares locked in for at least three years, will ensure Royal Mail staff have a stake in the organisation.

Moya Greene, chief executive of the Royal Mail Group, said: “Our employees will have a meaningful stake in the company and its future success.

“As we move into the private sector, the current legal position is that all terms and conditions that apply to Royal Mail employees would remain in place, on the same basis.

“To provide further reassurance, we will create a legally-binding and enforceable contract with theCWU [Communications Workers Union]. Pay and protections could not be changed for the period of the contract without CWU agreement.”

Phil Hall, special adviser at IFS ProShare, said the government had made a sensible decision in introducing a Sip. “It’s great news for employees because there’s a great wealth of UK and international evidence that shows employee share ownership is good for employers and employees alike,” he said.

“The fact that the shares are free means employees won’t lose anything if they fall.

“However, it’s more than likely the share price will increase and we will see a significant nest-egg built up for Royal Mail employees.”

[mooseT]

There it is. Employees wont lose anything if they fall.
Sounds familiar.

[osgoody1970]

COLLEAGUE SHARES BY ANOTHER NAME!!!!!!

[Sidley]

Someone in the comments banging that old familiar drum concerning the shares signifying a surrendering of rights to sue for unfair dismissal, rights to redundancy payments etc

Who could it be and is there a hidden agenda?

[UnhappyGremlin]

It's not a landmark at all.
It is merely a bribe intending to prevent IA and accepting privatisation as a done deal.
Not interested.

[Visionary Man]

It sounds great but after the colleague shares debacle I can't help but be skeptical of the intent behind it. It maybe a landmark in size but will it also be a landmark in false advertising?

I honestly felt as though I had been slapped in the face on behalf of everyone working for Royal Mail the way the modernisation agreement played out with the shares valuation following. It was during a time when RM was profitable after a long period of struggling too. When you factor in how much RM subsidiaries are over charging RM letters and stripping it of it's margin into god knows where, I am still not sure the motive behind this share issue is anything more than a play of a strategy to the tune of;

"Ooh shiny shiny look over here peasants..."
"QUICK grab the money and RUN!"

Moya will probably pat herself on the back with a big fat bonus as will the rest of the board and start self congratulating on a "job well done for moving RM through such a difficult phase" while everyone else sits and watches in despair as an investment bank or some monopolistic private interest buys up the majority stake hold and forces RM into begging for subsidies every few months to maintain the universal service after sucking all the working profit out of RM.

We've seen it so many times. The wolves have been at RM Letters for a while now. It is a fantastic service and the pride of the nation. There are some things that just don't get better with ruthless competition and those are usually the backbone services of our society.

I have a sense of fatalism about privitisation since it seems to be a big priority for the Eton brotherhood. If we can do anything to switch this up a bit and leave it being a genuinely good deal for the UK and RM employees (like say how about trying to move to a co-operative model?) I will feel like we have achieved great things.

Geoff

[borders]

how would a co- operative model look like in an already competitive market ? do the Tories do co-operatives ? Does the EU do co -operatives ?