Bord Gais workers back share ownership plan
Esop deal will mean average €36,000 windfall in exchange for €32.7m of cost-cutting
Bord Gais's 900 workers have voted overwhelmingly in favour of setting up an employee share ownership plan (Esop) which will give them an average windfall of over €36,300.
The ballot, which concluded this week, saw 96pc of workers accept the plan. It will see them take a 3.27pc stake in the State-owned gas supplier in return for agreeing to €32.7m of cost-saving measures over the next five years, as first reported by the Irish Independent last year.
The 32-year-old commercial State body has been independently valued at €1bn for the purpose of the deal. This is some €400m below the company's net tangible fixed assets as of the end of 2006, according to its most recent annual report.
After three years of talks between the company, three unions, the Department of Communications, Energy and Natural Resources and the Department of Finance, the next step will see an employee share ownership trust (Esot) being set up in April. It will have a lifespan of five years, though it will be backdated to the start of 2005. The value of cost-savings generated between 2005 and 2008 will be transferred into the trust this year, with savings for the next two years to be allocated in 2009 and 2010.
The equity must be held in trust for three years before it is distributed to staff in order to qualify for a tax exemption, the sources said. Workers who leave the company must sell their shares within three years to another employee.
The 3.27pc stake allocation represents the smallest Esop set-up to date in the semi-state sector. The original Esops in the 1990s, at the likes of the ACC Bank, ICC Bank, Eircom and Aer Lingus, saw staff receive 5pc of each of the former State-owned companies with an option of purchasing a further 9.9pc.
The small size of the Esot is a function of a Government stipulation which places a cap of 38,000 on what individual employees can receive in shares.
Unlike a Bord na Mona/Esop proposal unveiled last year, there is no "drag along, tag along" clause in the Bord Gais plan, which would force staff to sell their shares to an outside buyer if it were ever to be taken over.
People close to the process previously emphasised that there was no need to include this clause as the Government's stated policy is to maintain control of Bord Gais as a strategic asset.
Workers can also look forward to dividends on their shares. In recent years, the Exchequer has been receiving 10pc of the company's net profits in dividends, but this may increase as its current capital investment programme comes to an end.
- Joe Brennan
