Brewdog boss James Watt plans to give staff 20% of his stakeon May 3, 2022 at 8:39 pm

Brewdog boss James Watt has set out plans to give away nearly a fifth of his equity stake to the firm’s staff.

Mr Watt owns a quarter of the fast-growing Aberdeenshire-based beer maker.

Brewery and pub workers have criticised him over his behaviour and pressure on them to grow the firm rapidly.

At least partly in response, Mr Watt has set out an incentive plan which also means half of its pub profits will go to those who work on hourly rates in its 111 bars worldwide.

Based on last year’s figures, that could mean an annual bonus of between £3,000 and £5,000 each, in cash payouts made twice a year.

The chief executive claimed the giveaway of shares could be worth £120,000 for each Brewdog salaried staffer, comprising four annual tranches starting this June.

However, the shares are not yet tradeable, and plans to float shares on the stock exchange have been delayed.

A funding round in 2017 brought in an investment fund, TSG, with a £213m injection of capital, but on terms that financial analysts said stood to undermine the value of other shareholders.

James Watt currently holds 24.2% of the company, and the plan unveiled on Monday – to mark 15 years since it started brewing – is for him to give away 5% to an Employee Benefit Trust, reducing his stake to 19.2%.

That trust will distribute equally across salaried staff, at around 1.25% of the company each year. Anyone who leaves the company ahead of shares being floated on the stock exchange will have to give up the option to buy shares, which will then revert to the trust.

At current rates of turnover, the 5% stake will take up to eight years for the trust to distribute.

Between staff and the ‘Equity Punks’ who took part in several successful rounds of crowdfunding, a quarter of the company should be owned by small-scale shareholders once this process is complete.

The rewards package, unusually, extends to former members of staff, including some who were particularly outspoken about Mr Watt’s behaviour and the pressures they were under.

Ex-employees will get discounts on Brewdog products and in its bars, and will be able to join an alumni club.

Management was accused by former workers last summer of having a “culture of fear” within the business, with “toxic attitudes” towards junior staff.

A group of 60 employees published an open letter alleging the business was built upon a “cult of personality” around its founders, James Watt and Martin Dickie, with “growth at all costs” the overarching focus of the company.

Further revelations came to light in an investigation by BBC Scotland journalists.

Mr Watt said the group had already made changes after the open letter was published, stressing the employee reward scheme was not about mending relationships with employees, but “building the best company we possibly can”.

“Everything we’re doing today is about looking forward with a fantastic team,” he said.

He said Brewdog wanted to be a “new type of business”, and that shared ownership would help with recruitment, retention and team engagement.

“We want our team members to act as business owners and incentivise them as if they are business owners,” he added.

Mr Watt said the group was unlikely to float in the next 12 months given the market uncertainty, but said a listing was “very much part” part of the plan in the medium term.

Brewdog was founded in Fraserburgh by James Watt and his friend and fellow beer-lover Martin Dickie, as a challenger to conventional beer.

It expanded rapidly with a move to a new brewery in Ellon, where it is currently expanding its capacity. Other Brewdog breweries have been built in Ohio, Brisbane and Berlin.

It operates 111 bars around the world, with three hotels, and in Ellon it is expanding into spirits distillation.