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In July 1998, an Employee Share Ownership Plan giving them a 14.9% stake in the company was approved by workers at Telecom Eireann, the Irish state-owned telecommunciations concern.
Telecom Eireann's Employee Share Ownership Plan (ESOP) was formally endorsed on 3 July 1998 when the company's 11,000 employees agreed a deal which will give them a 14.9% stake - estimated to be worth over IEP 300 million - in a company valued at least IEP 2 billion.
The agreement also gives the go ahead to an agreed change programme in the Telecom Eireann " partnership "document, which includes some 2,000 voluntary redundancies and a range of changes in long-established working practices. The state-owned company, which is 20% owned by the Dutch/Swedish telecommunications outfit, KPN-Telia, is expected to be privatised in 1999, with the Government to sell off a further large tranche of its majority holding.
Under the ESOP deal, 9.9% of Telecom shares, costing IEP 190 million, will be transferred to a trade union-run trust. The company will pay IEP 100 million towards the cost of these shares and the union trust will raise another IEP 60 million through loans. Payment arrangements for the remaining IEP 30 million will depend on the precise value of the shares in 1999. Meanwhile, a further 5% - worth IEP 95 million - will be transferred from the company to the trust for agreed productivity improvements as they are implemented. Furthermore, for the first time, employees will also contribute towards funding their own pensions.
Communications Workers' Union (CWU) general secretary, Con Scanlon, said that the result was a watershed for Irish industrial relations and a clear endorsement of the leadership position adopted by his union. The CWU originally unveiled its ESOP strategy in May 1996 and was largely responsible for pushing the idea from an early stage. The union, in partnership with five smaller unions making up the "union coalition", engaged a Wall Street firm, Keilin & Co, to act as advisors and participate in talks with Government and company officials.
Talks appeared to be on the brink of collapse on a number of occasions, particularly when former Fine Gael Government Minister, Alan Dukes, expressed his opposition to any deal which went beyond the 5% employee shareholding "norm" already established in other state-owned companies, such as Aer Lingus and ESB (electricity supply) (IE9703207N).
The current Minister, Fianna Fail's Mary O' Rourke, took a different view, nudging her departmental officials towards an ESOP deal at "a fair price." In doing so, she was acting on her personal pre-1997 general election pledge and a crucial joint commitment made by incoming Taoiseach (Prime Minister), Fianna Fail's Bertie Ahern, and the deputy Prime Minister, Mary Harney of the Progressive Democrats (IE9706218F).