Brewdog CEO James Watt intends to give about a quarter of his company’s stock to employees. Mr Watt controls a quarter of Aberdeenshire Brewery, which is rapidly expanding.
Staff at the brewery and bar chastised him for his behavior and the pressure he put on them to expand the business swiftly. As a result, Mr Watt has created, at least in part, an incentive plan in which half of his pub revenues are distributed to people who pay by the hour at 111 bars throughout the world.
That could mean annual bonuses of between £3,000 and £5,000 paid out in cash twice a year, based on figures from last year. The CEO claims the share gift could be worth £120,000 per Brewdog employee, including four annual payments from June.
However, the shares are not yet in circulation and plans to list on the stock exchange have been delayed. A funding round in 2017 brought in investment fund TSG with a £213m injection, but financial analysts said its terms would hurt the value of other shareholders. James Watt, who currently owns 24.2% of the company, announced plans on Monday – marking the company’s 15th anniversary – to donate 5% of his shares to an employee benefit trust, reducing his stake to 19.2%.
This trust will be distributed equally among employees, which is approximately 1.25% of the company annually. Those who left the company before the IPO had to give up the option to buy shares and then transfer the shares back to the trust. At current sales rates, it would take up to 8 years to allocate a 5% share.
Between employees and the “equity punks” who have participated in several successful crowdfunding rounds, it is said that after the process is completed, a quarter of the company’s shares go to minority shareholders. The reward scheme extends unusually to former employees, including some who have been particularly open about Mr Watt’s behaviour and the stress they have endured. Former employees receive discounts on Brewdog products and bars, and can join the Alumni Association.
Last summer, former employees accused management of a “culture of fear” at the company and a “toxic attitude” towards junior staff. BRewdog has grown from a small business in Fraserburgh to an international company with breweries around the world.
A group of 60 employees has published an open letter claiming that the company is built on a “cult of personality” surrounding its founders, James Watt and Martin Dickey, and that “growth at all costs” is the company’s primary focus.
Further revelations came to light during an investigation by BBC Scotland reporters.
Mr Watt said the group had made changes following the publication of the open letter, emphasizing that the employee reward system was not about improving relations with employees, but “building the best company possible.”
“Everything we did today was about going forward with a great team,” he said.
He said Brewdog wants to be a “new kind of company” where shared ownership will help with recruiting, retention, and team engagement.
“We want our team members to play the role of business owners and motivate them like business owners,” he added.
Mr Watt said the group was unlikely to list in the next 12 months given the uncertainty in the market, but said the listing was a “very important part” of the medium-term plan.
Founded in Fraserburgh by James Watt and his friend and beer lover, Martin Dickie, Brewdog is a challenger to traditional beer.
It expanded rapidly with the move to a new brewery in Ellon and is currently expanding capacity. Other Brewdog breweries were built in Ohio, Brisbane, and Berlin.
It operates 111 bars and 3 hotels worldwide, and has expanded into spirits distillation in Elon.