Shaw Staffers Flock to Buyout Deal
What happens when you offer appealing buyout packages to nearly half of your workforce and five times more employees than expected take you up on the offer? That's the pickle that Shaw Communications finds itself in now.
Shaw Communications Inc. . -- the second-largest cable and broadband provider and fourth largest mobile operator in Canada – announced plans in late January to lay off about 650 employees, or nearly 5% of its management staff, as part of a broader drive "to reinvent its operating model.” Accordingly, the company sent out "voluntary departure program" offers to 6,500 of its 14,000 non-unionized employees, with the hope that about 10% of them would accept the severance packages. (See Shaw Sloughs Off 650 Staffers.).
But, as it turns out, the voluntary buyout offers succeeded well beyond Shaw's wildest dreams. The company disclosed last month that a whopping 3,300 staffers, or slightly more than half of those offered the severance deal, have agreed to take the package and leave Shaw. The list of those departing includes even the company's CFO, Vito Culmone, who presumably had something to do with crafting the packages.
Trying to put a positive spin on this development, Shaw officials insisted that they weren't totally surprised by the high take rate of the buyouts, which will reduce their total number of managers by more than 25%. "The actual uptake falls within scenarios considered and therefore we expect the business to operate in the normal course with no impact on customer experience," said Shaw President Jay Mahr in a company news release.
Shaw executives also noted that they couldn't turn down any of the buyout applications anyway because they set up the program to give staffers control over their own destiny. But the company did retain the right to stagger the timing of the departures over the next 18 months to soften the blow on its operations. It also restricted the buyout offers mainly to staffers who don't work in "customer-facing areas" like customer care, retail and sales.
As for Culmone, he will step down from his CFO post in early May. Shaw said his replacement will be Trevor English, a 14-year company veteran who has been EVP, chief strategy and business development officer for Shaw. His new position will be EVP, chief financial and corporate development officer.
Shaw said it expects to post a restructuring charge of approximately C$450 million in the second quarter of fiscal 2018, "primarily related to severance and other employee related costs." But, over the longer term, it expects to save about C$225 million (US$173.3 million) per year by fiscal 2020, with the savings equally weighted between opex and capex.
— Alan Breznick, Cable/Video Practice Leader, Light Reading