Two of Tesco’s sharesave schemes are set to pay out £148m to be shared between nearly 50,000 staff.
Under the terms of the schemes, staff set aside a monthly fixed sum from their salary of between £5 and £50 for a three or five year period. When the scheme matures, employees have the option to buy Tesco shares at a price which was set when they joined the scheme. This share option price is approximately 20% less than the share price at the time so staff stand to make money straight away.
Employees who joined the scheme five years ago can purchase shares at the 2001 option price of £1.98 each, while†staff who joined the scheme three years ago can buy shares at the 2003 price of £1.95. They can then sell the shares at a profit or keep them as a long-term investment.
Tesco’s share price now stands at over £4.00, so the schemes’ 6,000 top savers will net more than £7,000 which represents a 120% return on investment.
Sir Terry Leahy, Tesco chief executive, said: “Share schemes are an important part of our industry-leading benefits package and I’m delighted that so many people have chosen to invest and reaped the rewards they deserve.”
Commenting on the success of the share schemes, Fiona Downes, head of employee share ownership at Ifs Proshare, said: “It is good news for [sharesave] schemes in general as this is yet another positive example of the benefits saving in this way can have. The success of the Tesco [sharesave] scheme should serve as an inspiration to both employees not participating in their company scheme and companies not currently offering any form of employee share ownership to their workers.”