As expected, Flight Centre Travel Group Ltd (ASX: FLT) shares continue to fight their way out of a difficult period. Is employee retention the key to the recovery of Flight Centre shares?
FLT share price
Staff granted share rights
Flight Centre announced it will be granting sales and support staff share rights if they stay until 31 December 2022.
The business notes most participants will receive a one-off grant of 250 share rights, which will vest in February 2023.
Should these participants meet their continuous employment conditions, they will be able to exercise their rights and receive 250 ordinary shares.
In other words, these participants will gain full ownership of these shares in February 2023 subject to meeting all employment conditions.
The company estimates around 7,500 staff are expected to receive about 1.9 million shares at an estimated cost of $30 million based on today’s share price.
Is this what Flight Centre staff want?
A quick scroll through employee reviews on Indeed, Glassdoor and Seek.com show average employee review ratings.
The most glaring negatives from working at Flight Centre relate to salary, benefits and work-life balance.
A participant stands to receive around $3,000 based on today’s share price and potentially $15,000 if Flight Centre reaches its former peak of $60 per share.
There is also the risk of the Flight Centre share price dropping to record lows.
Whilst such a benefit will help with staff retention, there are also qualitative factors that remain unaddressed.
My take
I think this is a sound move to provide temporary motivation and drive for existing employees. Flight Centre could take a leaf out of Costco (NASDAQ: COST) and South West Airlines Co (NYSE: LUV).
Costco has consistently ranked in Glassdoor’s “Best Places to Work” list since 2012 and one main reason is money.
Costco has consistently raised the minimum wage of its employees, ensuring they meet industry standards.
At South West Airlines, the co-founder, Herb Kelleher implemented a culture that placed employee needs before the customers’ or shareholders’.
Kelleher emphasised that if you treat employees well, they treat customers well, the customers come back, and the shareholders get better financial results.
A key reason why Flight Centre staff may be raising work-life balance as an issue is due to a high level of workload, so there is potential for improvement in this area.
In saying this, I think this shares arrangement will assist with keeping employee turnover low in a challenging time.
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