U.K. Business Secretary Sajid Javid overruled his most senior official to insist that staff at Royal Mail Plc should get up to 1 percent of the company as the government sold down its remaining stake.
Martin Donnelly, permanent secretary at the Department for Business, Innovation and Skills, wrote to Javid on June 11, the day the sale was announced, saying he wasn’t persuaded giving away the shares represented good value for money and that he’d need a written instruction before he went ahead.
“I have considered whether it is possible to construct a business case that the impact of the employee shareholdings on the company’s performance justifies the taxpayers’ expenditure involved,” Donnelly said in the letter, released on Tuesday. “I am not aware of sufficient evidence to reach that conclusion.”
Javid’s reply, also published, was that the shares were a reward to Royal Mail staff for their “hard work, which has contributed to the recent performance of the company.”
With Royal Mail currently valued at around 5 billion pounds ($7.9 billion), the giveaway to staff is worth up to 50 million pounds. When the company first floated in Oct. 2013, a decision to give 10 percent to staff had the result of increasing public borrowing by 300 million pounds.