Bailey, centre, with Cinven’s Richard Munton and Time Inc’s Michael Pepe
Share-option schemes that could have earned long-serving members of IPC staff windfalls of at least £10,000 have been scrapped as a result of the AOL Time Warner £1.15bn takeover. Instead, all staff will be offered an ex gratia bonus of up to £1,250 each.
The windfall would have applied to staff who were employed before the Cinven buyout. Now it will be replaced by a stock-option plan for all regular employees "in keeping with the AOL Time Warner philosophy of employee ownership".
The move has disappointed many. One insider said: "People thought they would get £5,000 worth of shares free and have an opportunity to buy £10,000 for a peppercorn amount. There is certainly a feeling of disappointment."
IPC chief executive Sly Bailey said the new plan would benefit all staff. "The fact is that the shares are under water and therefore have no value, but the share-account scheme is going to be paid out in full in the form of an ex gratia payment from Cinven. I think people should be delighted by the fact that Cinven is committed to making an ex gratia payment."
Bailey, one of the major stakeholders, refused to reveal how much the board would make from the deal.
"We have never revealed shareholding dealings and we are not going to start now," she said.
Staff received a Q&A briefing about the share-option schemes last week. Concerns were also aired in a bulletin by the staff council.
Bailey denied that staff expectations had been artificially raised. "I would clearly refute that. At the point of the buyout, we talked about what the future of the business could look like and the point is the business has been sold for a sum of money." She said it was too early to say whether Time Inc’s UK operation, which includes In Style, Time and Wallpaper, would be integrated into IPC’s offices.
The deal is due to be completed in September, subject to clearance. IPC is expected to meet with Time Inc over the next few weeks to discuss the running of the company. "Our first communication, about how we see the running of the business going forward, is with our staff," said Bailey.
She said she was committed to the company in the long term and that the board would remain in place. She did not anticipate any changes to the internal structure, formed of five separate companies. "Obviously we will now have new ways of operating.
"Time Inc does run its business in a decentralised way which is something we have been leaning towards and we do value a level of creative input at the business close to the market and close to readers," she added.
By Ruth Addicott