Italy's first ESOP agreement signed at Gucci

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In February 2000, trade unions and the Gucci group, one of Italy's largest fashion companies, signed Italy's first Employee Share Ownership Plan (ESOP) agreement.

The Gucci group, a famous Italian textiles and garment company specialising in the production of purses and other leather products, is of major economic importance for the Florence area and has a long tradition of participative industrial relations. On 28 February 2000, Gucci management and the commerce and textiles sectoral organisations affiliated to the Cgil, Cisl and Uil trade union confederations signed an Employee Share Ownership Plan (ESOP) agreement, defining the terms of workers' participation in the ownership of Gucci.

Under the agreement, all Gucci employees, including homeworkers, will be able to purchase the company's shares using their end-of-service allowance (trattamento di fine rapporto, Tfr, - a part of pay set aside and paid to the employee at the end of the employment relationship) and a portion, or all, of their performance-related pay. White- and blue-collar workers who participate in the plan will receive 38.25 shares in annual tranches, with a maximum value of ITL 4 million. The first tranche of shares will be issued in March 2000 and the rest at the end of January 2002. Managers will receive one share each by the end of March 2000.

The agreement also provides for the establishment of an employee shareholder association (membership of which will be obligatory for those purchasing shares), legally recognised by the ownership as representing its members and having the necessary qualifications to represent them during general meetings of shareholders. A share account, registered in the association's name, will be opened in a bank identified in the agreement.

Employee shareholders will be able to sell the shares only three years after the purchase. Nevertheless, the agreement does not exclude the possibility of the partners discussing how to set aside this restrictton in some specific cases on the written request of the employee shareholder concerned. If the employment relationship comes to an end, the three-year contractual waiting period will still be valid, but the former employee will be obliged to leave the shareholder association and to open a personal share account.

Finally, the parties agree to establish a joint committee to widen the company's industrial relations system in the light of the contents of the ESOP agreement.

The fact that all three main confederal unions have signed an agreement on workers' participation in a company's shares, may represent an important turning point. This is a highly debated subject and the source of many disagreements among the union confederations (IT9905113N). Cisl and Uil are generally in favour of such schemes while Cgil usually totally disagrees with them. Pierpaolo Baretta, confederal secretary of Cisl, stated that: "I hope that Cgil has second thoughts so that it will be possible to develop participative industrial relations and new forms of economic democracy, in a unitary way, in other big companies, such as recently privatised companies like Telecom and Poste."