article in the australian, page-12

I think the company offered non-recourse loans to staff to purchase shares.

For those of us familiar and comfortable with the share market, we can get to grips with what has happened in the context of the market environment and the risks it brings. I would imagine that senior staff at Centro can do the same.

I do, however, feel for the middle managers and grass roots staff in the organisation who are paid significantly less and are not market savvy. They would have seen this as a benefit of working for Centro and would have felt good about the value of their share portfolio. A share plan like this also works wonders as a retention tool for existing staff.

Staff satisfaction and engagement is a critical element of running a successful business and it is in the current environment that a company like Centro needs this to remain in place. Engaged staff = happy customers = healthy financial results.

I really hope the company has explained the ins and outs of what has happened to staff members and is looking at other ways to help them with their financial future. Because the staff loans were non recourse, the staff will not have to pay them back. Of course if they took out margin loans, this is a different matter.

There is a good chance that the SP will recover over the next few years in which case this may only be a blip for staff. I also hope to goodness that the company will encourage staff to remain in the programme when the company gets back on its feet. If staff were to buy shares with non-recourse loans when the dust has settled, they could be in for some very healthy returns in years to come.

At the next AGM, if the company put up a motion to give a one-off allocation of shares or options to all employees (with vesting period / hurdles) as a thank-you for their efforts in these troubled times, it would certainly get my vote.