Share options and seats on the board for workers

FOREIGN and local companies doing business in SA should be considering issuing share options even to low-skilled workers in order to align the interests of shareholders and employees.

Simply put, workers must be taught how shares work and how these instruments can create wealth that can last for generations. There is a view that the strikes that have dogged SA’s companies are largely because of the fact that the interests of the corporations, shareholders and employees are not aligned appropriately.

Unionised and non-unionised workers, who are partly compensated with share options for productivity, would think twice about going on strike, especially if they are taught how the stock market works.

If workers are granted share options, they will be taught that unnecessary strike action comes at a cost and can have an adverse effect on efforts to make a better life for ordinary workers.

I doubt if there is any worker in this country that does not want to be well-off.

Workers will also understand, and I doubt that they do at present, that their pensions are invested in the stock market and strikes limit the upside that can be gained for their retirement.

If union bosses tried to convince their members not to take up share options, I doubt if they would have a leg to stand on. Why do I think this way? Union bosses are fully aware that their unions, through their investment arms, also play the stock market.

Even more interesting, some communist chiefs have more income to drink Rupert & Rothschild by the barrel in fancy restaurants in Rosebank, Johannesburg.

After downing the wine they then jet off in their fancy Bavarianmade vehicles.

Workers must know that through share options their lives too can be improved.

Issuing shares will come as a dilution to shareholders in the short term, but it’s a strategic and grand bargain in the long term.

This is the compromise that cor- porations will have to make if they are to introduce workers to the market. The share options must be separated from employee share ownership plans (Esops), which often come with black economic empowerment transactions.

Share options granted on the basis of productivity to all workers would go a long way towards minimising the income inequalities in this country.

Inequalities are partly the source of the instability in SA, which sometimes leads to strike action, at a cost to the economy.

After workers are granted share options, corporations could consider moving a step further.

Captains of industry need to take the decision to invite union leadership to serve on company boards. In fact, workers should be given an opportunity to nominate trusted union bosses to serve on company boards to look after workers’ interests.

If union bosses were to be given nonexecutive director positions, earn directors’ fees, and look after their workers’ interests, this could probably minimise strike action.

There is a better chance of solving battles at a boardroom level.

Serving on board would help union bosses understand business better. On the other hand, through constant interaction, the captains of industry would come to understand unions better.

Unions bosses would further be granted a platform to come up with solutions to challenges facing business rather than shouting from the streets.

Unions would know that they have fiduciary duties as directors and that they could be held liable if companies collapse because of recklessness.

This idea of a unionist serving on a company’s board should not be considered strange. After all, Frans Baleni, the general secretary of the National Union of Mineworkers, sits on the board of the Development Bank of Southern Africa. From where he sits Baleni can attest that he understands the workings of a development bank far better than me as a financial journalist. If anything, more people of Baleni’s calibre should be invited and nominated to serve on boards.

Workers must be taught to love capitalism. The Afrikaner Broederbond created wealthy Afrikaners today because they understood as far back as the 1920s that the challenge around the poor Afrikaner was not because of capitalism as an economic system, but the fact that they did not have a stake in the economic system.

If workers understood this principle and demanded a stake, I can bet SA would be a better-off and much more productive economy to invest in.