Consignia mulls share perk scheme

Labour unrest has been one of Consignia's main problems

In another attempt to ease gloom among postal workers, Consignia is reportedly planning to hand out "phantom share options" to some 200,000 staff.

Consignia, still wholly state-owned, has no publicly traded shares, but the plan would involve the creation of proxy stock that would mirror the performance of the firm.

In recent years, Consignia has fallen heavily into loss, despite still enjoying a near-complete monopoly of British postal services.

Extremely low morale, resulting in a high incidence of strikes, has been pinpointed as one of the main factors for Consignia's fading fortunes.

In an interview with the Observer newspaper, Allan Leighton, Consignia's new chairman, argued that the proposed scheme would give postal workers a performance-boosting stake in the business.

Something for everyone

The proposed scheme is modelled loosely on the long-term incentive packages commonly given to senior corporate executives.

But the phantom stock option plan would cover 200,000 staff - almost all of the firm's permanent employees.

Details of the scheme are still under discussion, but staff would probably receive their first shares - worth up to £1,000 per year - after three years, if the business had returned to profit.

Consignia is currently losing £1.5m a day.

The share option scheme, combined with Mr Leighton's aim of raising salaries, could help take the edge off a cost-cutting programme that will see 30,000 jobs lost.

Breathing space

Mr Leighton is in discussions over funding arrangements with Patricia Hewitt, secretary of state for trade and industry, and is particularly keen on shielding Consignia from competition until its finances are in better shape.

The Treasury is also eyeing Consignia, with a view to claiming any future profits in the form of dividends, but Mr Leighton argues that payments to employees must come before government claims.

The notion of phantom shares would be a first for a state-owned agency in the UK, where performance-related pay is only gradually being introduced.

But it is a relatively common phenomenon in the private sector, with firms running phantom share schemes for employees of subsidiaries whose stock is not quoted.