Birmingham, West Midlands-based Kalamazoo Plc has introduced an employee share ownership scheme that guarantees workers one free share for every share they buy. Kalamazoo says 40% of the workforce has taken up the offer. As a body, the workforce may own up to 10% of the issued share capital. Last year, chairman Peter Harrap hinted that he was considering an incentive scheme for staff after saying that despite Kalamazoo’s reversed fortunes, staff had not benefitted. At the heart of the scheme ia a thrift plan, in which 40% of the staff already participate. From a UKP10 minimum to a 10% of salary maximum, staff can save what they like. Each quarter, money accumulated is used to buy shares in the market and Kalamazoo matches those shares. Shares purchased by staff must be left in trust for a minimum of two years; if the free shares are left in trust for five years then there is no capital gains tax due when they are sold. Dividends are paid to scheme members on both bought and free shares, so in this way the workforce gets to benefit from Kalamazoo’s current good performance, and staff can keep shares after they leave. The company says the introduction of the scheme is partly to revive its Quaker principals on which the original bonus scheme, the Kalamazoo Workers Trust, was founded. Unfortunately, although the trust protected against any predation from potential hostile asset strippers by owning 51.5% of shares, the trust did not form the basis of a sensible incentive scheme. The trust owns 51.1% of the equity in the form of special trust shares, which pay out a bonus to all employees depending on the company’s performance and their length of service, but individuals do not beneficially own any shares. This year the full bonus is 2.5% of salary. It is from the trust that the free shares will come in the incentive scheme.
