Bord Gáis workers’ share payout is money for old rope . . . our money
Opinion: a windfall awaits staff as the utility’s State-sponsored employee share ownership plan is wound up
“Esops were all the rage in the Bertie years . . . Bord Gáis got one in 2008, just months before the economic crash.” Photograph: Vitali Dyatchenko
In the coming weeks another of those State-sponsored employee share ownership plans (Esops) will be wound up for the benefit of the workers. This time around, the company in question is Bord Gáis, which is being broken up to allow for the sale of the energy business to Centrica for €1.12 billion.
A consequence of this sale is that the Esop’s 3.27 per cent stake will have to be dealt with before Centrica takes ownership. This will involve the State-owned company buying the stake from the workers and the funds being distributed to members.
KPMG has already valued the business and the Esop is now awaiting clearance from the Revenue Commissioners on how the distributions can be effected in a tax-efficient way.
My colleague Mark Paul reported yesterday that the Esop’s shares could be worth more than €70 million, and net members staggered payments of up to €75,000 each. These payments could be stretched out over five years to make them as tax-efficient as possible for the members.
The Esop was set up in 2008 after three years of negotiations between the Government, the company and the unions. In a nutshell, this involved the transfer of a valuable asset from taxpayers to a privileged group of workers. It was one of the final acts of Bertie Ahern’s 11-year tenure as Taoiseach.
Bord Gáis and the unions will argue that this shareholding was given in return for €32 million in productivity savings from workers between 2005 and 2009. We were told the same thing by Eircom but that was just a load of guff. It was free money for simply doing their jobs.
The details of the productivity savings are vague at best. We’re told that they were externally audited. So were the banks in the property bubble years. It’s hardly a comfort.
An analysis of Bord Gáis’s annual reports shows that its employee numbers rose from 714 in 2005 to 1,006 in 2009. The payroll over the same period increased from €40.1 million to €64.2 million.
The average cost to the company of each employee rose from €56,162 in 2005 to €63,817 in 2009.
Bord Gáis’s turnover between 2005 and 2009 rose by 57.5 per cent to €1.35 billion. Over the same time period, its cost of sales rose by 65 per cent while its operating costs, excluding depreciation, increased by 69.5 per cent.
The company’s headcount increased by 41 per cent and each employee was paid, on average, 13.6 per cent more over a period when costs increased at a faster rate than revenues. It’s hard to detect the productivity savings from those statistics.