Nearly 23,000 BT staff are stitting on a £1.1bn fortune after a five-year employee share-ownership scheme paid out in spectacular fashion. The windfalls are worth an average of £49,000 each.
Staff who joined the “save as you earn” scheme in 2009 received discounted shares at 61p each and kept investing on a monthly basis. At the time, the BT share price stood at about 75p. Since then, the shares have rocketed to 388.5p as the company’s fortunes have improved.
Payouts will vary according to how much each employee invested. Under the terms of the scheme, workers – mostly call centre agents and engineers – saved between £5 and £225 every month until July 2014.
BT said a member of staff who contributed the average of £124 a month will have seen the value of their shares soar from £7,762 to over £49,000 – a gain of nearly £42,000.
Around 7,000 participants saved the maximum of £225 a month, according to BT, collecting almost £90,000 a head – or a gain of £76,000.
In total, around a third of BT’s employees invested £177m for a return of £1.1bn – a gain of nearly £900m.
However, only a small minority have sold their shares so far.
The chief executive Gavin Patterson, who ran BT Retail before taking the top job last year, said: “I’m delighted that so many BT people are sharing in the company’s success through our save-share plan. BT was facing tough times five years ago and this was reflected in the share price. We’re in a much stronger place today and I would like to thank our people for the major part they’ve played in the turnaround.”
The City commentator Louise Cooper said: “The City has come in for a lot of flak during the financial crisis but this example shows that share ownership has an important role in motivating and rewarding staff. It is fabulous news that employees will get rewarded for backing the company they work for. The brilliance of employee share- ownership plans is that they align the interests of employees and shareholders. More companies should follow BT’s example. Share option packages should not just be for the board, but for all staff.”
Mr Patterson has come in for some criticism over his own pay. The shareholder lobby group Pirc recently described BT’s executive bonus scheme as “highly excessive” because Mr Patterson could earn £7.4m if he hits targets, making his package worth up to 740 per cent of base salary.
However, most shareholders have backed the pay scheme as Britain’s biggest telecoms company has performed strongly, launching BT Sport last year – a move that helped to increase annual revenues at its consumer division for the first time in a decade.
BT has also changed the chief executive’s package so he will get a “significant reduction” in potential bonus for average performance.
A number of leading companies offer profit-share schemes. The clothing retailer Sports Direct paid out £112m in shares to around 2,000 staff last year as part of a 2009 long-term bonus scheme, with a worker earning £20,000 in line for a £79,000 bonus.
The John Lewis Partnership gives all staff the same percentage bonus as a proportion of base salary.