Scott & Fyfe welcomes employee ownership
Scott & Fyfe Limited, the Tayport based technical textiles business that is currently family owned, has announced that it is to transform itself into an employee owned company.
Mr Scott & Mr Fyfe started a linen works in 1864 and the company is now one of the few survivors of the Tayside jute industry. It reinvented itself in the 1960s with the development of polypropylene to become a leading player in the flexible industrial bulk container business. This was achieved under the chairmanship of Hamish Tough who retired in 2009.
New chairman Professor Nick Kuenssberg and the new chief executive John Lupton recruited in 2010 introduced a number of significant changes which have led to a profitable professionally managed business with an innovation and export led strategy, the benefits of which have been recognised by the family.
Hamish and his sons Richard and David, both currently directors of the company, represent the family owners. They have decided that the long term sustainability of the company will be best served by building on this new strategy and moving to employee ownership.
After months of discussion and consultation within the family and the board, supported by Co-operative Development Scotland, Scottish Enterprise and specialist consultants Baxi Partnership, this dramatic decision was announced to the 100 employees of the company with a detailed presentation on 13 September.
The family will sell all their shares to a newly established Scott & Fyfe Employee Benefits Trust which will always own a majority of the ordinary shares. Richard and David Tough will reinvest the bulk of the proceeds in redeemable preference capital which will be paid out over a period of years.
In parallel a Share Incentive Plan will be set up to facilitate the issue and sale of shares to individual employees. Employees will receive a one-off award of 1,500 shares each, 5% of the annual profit in shares and will have the opportunity to buy shares each year. Additionally senior employees will benefit from the issue of share options which will vest on satisfaction of demanding performance criteria.
In this way only current employees and the Employee Benefits Trust will be ordinary shareholders in the company. All employees will be shareholders and will have the opportunity of building a cumulative package of shares over the years which can be cashed in when they leave the company. Under employee ownership legislation there are significant tax advantages for employees under these schemes which make them
even more attractive.
Employees will have the right to elect an employee director of the company and to vote at the annual general meeting. They will also elect two trustees for the Employee Benefits Trust and will see the rights of the existing Employee Forum enhanced.
The combination of employee involvement and employee ownership will contribute to the future success of the company and will provide opportunities for employees to build a long term stake in the company.
Nick Kuenssberg, chairman, said; “This move by the Tough family is to be welcomed; this development will help to underwrite an exciting future for the company and its employees”.
Richard Tough added: “This whole process is complicated and will take a few months, but we as a family are fully committed to it and look forward to making it work for all concerned, the employees, the company and the Tayport community.” John Lupton, chief executive, commented: “With the right teamwork we can be entitled to a share of the profits, with the right attitude we can add real value and with the right effort we can go out and make it happen. It is a new dawn for everyone at Scott and Fyfe and its up to us to seize this chance.”
John Alexander, specialist advisor with Baxi Partnership who has been instrumental in the transition comments: “Scott & Fyfe have used a creative range of share schemes and stable trust arrangements to build a sustainable model of employee ownership that rewards innovation and growth as well as respecting the legacy of the Tough family.”