Postmen in share bonanza
Nearly 200,000 employees at Consignia, the renamed Post Office, are to benefit from a ‘phantom share option’ bonus scheme as part of chairman Allan Leighton’s revival of the business.
Leighton, who is soon to announce 15,000 more redundancies at Royal Mail in addition to 15,000 in other parts of the group, wants to couple the bad news with a scheme to lift the low morale of the remaining staff.
Leighton has been discussing the plan with Trade and Industry Secretary Patricia Hewitt, who not only supports the plan, but has come out on Leighton’s side in his battle with the postal regulator, Postcomm.
Hewitt has written to Postcomm chief Graham Corbett asking him to think again about radical plans for open ing British postal markets to competition by 2006, which Leighton has said could badly damage Consignia.
Leighton’s scheme would involve creating a ‘long-term incentive plan’ similar to those given to City executives and some employees. This would probably mean creating ‘phantom shares’ in Consignia, which has no tradeable shares because it is state-owned.
He is discussing the fund ing details with Hewitt. The first shares – worth between £600 and £1,000 a year per head to the staff – would be distributed after three years, if the business has returned to profit and is generating cash. Leighton plans to continue the scheme after that.
In addition, Leighton wants to see all postmen being paid at least £300 a week by then.
He argues in his rescue plan that Treasury claims on Post Office profits via a ‘dividend payment’ should be suspended while the business is losing money. Payments to employees under the share scheme could come before future dividends.
Leighton told The Observer: ‘This will be significant for the people who work hard for the business. If you are part of something, you will want it to succeed.’
Hewitt has written to Corbett backing Consignia, and raising fears that the regulator’s imminent intention to open bulk mail to competition could damage Consignia’s ability to provide a universal, one-price letter delivery service all over Britain, as competitors such as TPG, the Dutch postal group, cream off profitable business.
Hewitt believes Leighton is willing to shake up Consignia without needing the threat of competition as a spur.
Echoing concern previously voiced by the National Audit Office, Hewitt said: ‘We are at a critical stage in implementation of postal reforms. I would ask the commissioners to take full account of the changing circumstances, and in particular to consider very carefully the size and timing of the first step of market opening to minimise the risk that the only licensed universal service provider is unable to finance its activities.’
