BT is to give its 100,000 employees £50m in shares each year as part of a new scheme to boost morale and rebuild the telecom’s image following a troubled couple of years.
BT’s new chief executive, Philip Jansen, who took over from Gavin Patterson in February, said the “yourshare” scheme forms part of his plans to create a “new, re-energised” BT that includes changing the logo.
“I’m asking our colleagues for their commitment to making BT a national champion,” said Jansen. “I want to give them ownership in our company and a share in our success. I want to make BT a company that exceeds our customers’ expectations and does a brilliant job for the country. To achieve that, I’m going to start with our colleagues.”
Jansen’s move follows a tough couple of years for BT which has included an Italian accounting scandal, a profit warning that stripped billions off its market value, and plans to cut 13,000 of its 106,000 staff in a £1.5bn cost-cutting programme. The company is also moving out of its central London base at St Paul’s, where it has been headquartered since 1874, and closing 20 offices across the UK. Last month, BT’s share price fell to its lowest level since 2011.
BT said the new scheme, which will start in July 2020, will equate to an initial award value of £500 per employee. Staff will have to hold the shares for a minimum of three years.
“BT’s move towards employee ownership is very welcome, giving employees a stronger voice, which has been shown to foster productivity, growth and inclusivity in the workplace,” said Carolyn Fairbairn, director general of the CBI.
BT already has a scheme, called saveshare, that allows staff to make monthly savings from their pay to then buy BT shares at a discount. Tens of thousands of staff who took part have shared billions when the schemes vested over the years. Individual payouts ranged from £4,400 to up to £89,000.
BT is the latest firm to adopt an increasingly popular employee share ownership programme. On Tuesday, Julian Richer, the founder of Richer Sounds, handed control of the hi-fi and TV retail chain to staff. Richer transferred 60% of his shares into a John Lewis-style trust for employees. He was paid £9.2m for the stake but is giving £3.5m back to the chain’s 531 staff who will receive £1,000 for every year employed. The average payout will be £8,000 but 39 employees with more than 20 years’ service stand to receive substantial windfalls.
Earlier this week engineering group Weir unveiled an all-employee share plan to allow its 15,000 staff to build stakes in the business. It starts with an initial award of £300 this year, and a further £300 in 2020.
The Employee Ownership Association (EOA) said more than 350 businesses have now adopted the model.
Last year the owners of Aardman, the Bristol-based animation studio behind Wallace & Gromit, Shaun the Sheep and Morph, used a trust to pass a 75% stake to 140 employees and freelancers. The move was designed to protect the company’s independence and its animators will continue to receive a share of profits.
Riverford Organic Farmers made the switch last year when founder Guy Singh-Watson gave a 76% stake to a trust. Its 650 employees will share 10% of annual profits generated by the £60m turnover business, which delivers nearly 50,000 boxes of produce a week. The company is paying Singh-Watson £6m over four years.
Employees of 134-year-old Essex jam-maker Wilkin & Sons own almost half the company through a trust. Many staff live in company accommodation on the estate surrounding the Tiptree factory, with trading profits used to buy back shares for the trust. Profits also go to support local projects including sports and arts groups.
The John Lewis Partnership, which owns the eponymous department stores and Waitrose, is the UK’s biggest employee-owned business with 83,900 employees or “partners”.
Other companies to have offered slightly different share-based schemes, such as those that give staff the option of buying stock at a discount such as BT’s saveshare plan, include Royal Mail, Asda, Tesco, Morrisons and drinks group Diageo.