Royal Mail staff have been informed that their employee share scheme will be virtually worthless when it matures next year.
The ColleagueShares scheme, which was launched in 2007 and will mature in 2012, was set up by former chairman Allan Leighton and former chief executive Adam Crozier as a phantom equity plan.
In a letter to staff, the Royal Mail said the scheme has paid out bonuses of £1,600 to full-time eligible staff with a further £1,000 available if targets are met, of which £600 is funded by the scheme.
However, due to the difficult outlook for the business, it is now likely staff will only receive the remainder of the cash bonus element. The shares themselves are unlikely to have any value when they start to mature later this year. The letter stated: “We will not know the exact value of the ColleagueShares until the end of the scheme in 2012.”
Chief executive Moya Greene has blamed the group’s financial position and lower-than-expected cost savings. Other reasons for the worthless share scheme is the volume of mail, which has fallen by 20% in the past five years, and a pension fund deficit that currently sits at £8.4 billion.
Royal Mail declined to comment.
Dave Ward, deputy general secretary at the Communication Workers Union (CWU), said: “Royal Mail has destroyed any remaining trust postal workers have for the company. Its argument that ColleagueShare has no value suits the company’s new business plan and also fits with the agenda of the Conservative-led government and plans to privatise Royal Mail.
“We acknowledge Royal Mail has problems with declining mail volumes and revenue but the company needs to honour its commitments to workers and be open and transparent about its financial problems.”
Read more articles on employee share schemes