Royal Mail chiefs apply for £500k of extra shares
Small investors could lose out to executives
ROYAL Mail executives have applied for around £500,000 of additional shares in the controversial flotation of the state- owned giant, it emerged last night.
The applications – which include one from chief executive Moya Greene – will receive ‘priority’ over other small investors clamouring to buy shares i n the controversial privatisation.
Last night campaigners said it would be wrong if Royal Mail’s executives and the City were to make ‘fat profits’ if the demand for shares by small shareholders is scaled back.
Like all Royal Mail workers, Miss Greene will get a chunk of free shares, estimated to be worth around £2,000 for each worker.
They could make an instant profit of more than £700 as the shares are set to rise sharply when conditional trading begins on the stock market on Friday, possibly jumping from £3 to £4.
But Miss Greene and her ten fellow directors also want to buy shares in the flotation, according to the company’s prospectus.
Buried on page 214, it states: ‘The directors have indicated to the company that they intend to make applications in the offer for an amount equal to, at least, approximately £500,000, in aggregate.’
The executives will benefit from the same ‘priority’ given to Royal Mail’s workers when applying f or shares and can apply for as many shares as they wish within the tranche that has been set aside for staff.
If that part of the offer is oversubscribed then they will be subjected to a £10,000 limit.
But the executives will be hoping that many of their lower paid staff will simply not have the f i nancial resources to apply for more shares. The average post- man working full-time earns a pay package of nearly £25,000, while Miss Greene enjoys a pay package of around £1.5million a year.
Dr Tim May, of the Wealth Management Association, which campaigns for the rights of small shareholders, warned he would be ‘very disappointed’ if they were overlooked.
He said: ‘Given this is the first positive sign of smaller investors getting a share in our economic growth, we would be very disappointed if their allocation were reduced significantly, or at all.’
Business minister Michael Fallon
‘Could make them a fat profit’
has insisted small investors who want to buy shares in the privatisation will ‘get their fair share’.
The Government decided to set up an ‘employee priority offer’, open to all workers, to encourage loyalty among its staff and to give them ‘a share in the group’s success.’ Under the deal, they will pay the same price as other retail investors – between £2.60 and £3.30 per share – but will ‘receive priority on up to the first £10,000-worth of shares applied for’.
The ‘employee priority offer’ will be capped at 10 per cent of the total number of shares allocated in the retail offer, which is 30 per cent of the total number.
Justin Modray, of the personal finance website Candid Money, said: ‘ While the Royal Mail flotation could stand to make the City and Royal Mail executives a fat profit, it is important that small investors do not get overlooked and end up having their share allocation scaled back.
‘The danger is that Joe Bloggs gets scaled back, but the City and the executives do not suffer in the same way.’
Royal Mail’s eight non-executive directors, including the chairman Donald Brydon, have opted out of receiving free shares, deciding it was ‘inappropriate’ to accept them.
But both the non-executive directors and the executive directors have subscribed for a total of £500,000 of shares in the company.
The exact number of shares which they end up getting is expected to be published on Friday when the share price is announced.
The Royal Mail prospectus states: ‘The directors will not receive any priority application beyond that applicable to all eligible employees.’
To be eligible, a worker must have been employed by the company on July 10 and still be working for the firm at the time of the flotation.
After five years, they can be sold tax-free.