THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Tuesday, February 21, 1995 TAG: 9502210294
SECTION: BUSINESS PAGE: D3 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND LENGTH: Medium: 58 lines
Philip Morris USA's skilled workers are being offered about $6,000 worth of stock instead of pay raises under an agreement reached with one of the company's unions.
``This is the first time that, in lieu of wages, the union has ever asked to take stock in the corporation,'' said Stephen Spain, the Richmond-based tobacco coordinator for the Machinists Union.
Spain, who negotiated for the seven crafts unions at Philip Morris USA, said Monday that he reached an agreement with the company Friday after two weeks of bargaining in Florida. Votes are scheduled during the next two weeks.
Under the proposed three-year contract, the company would issue each worker 94 shares of stock that could be redeemed in 1996 or 1997. Workers also would receive a one-year dividend, worth $3.30 a share.
The contract is being considered by 550 crafts workers at Philip Morris USA in Richmond and 650 workers in Cabarrus County, N.C., and Louisville, Ky. The machinists, electricians, plumbers and other skilled workers care for the company's high-speed cigarette machinery.
Unlike a recent stock bonus of more than $2,000 obtained in a contract approved by Philip Morris USA's other major union - the Bakery, Confectionery and Tobacco Workers International - Spain said that the promissory shares his unions negotiated have tax advantages.
``The employee has the benefit of holding the stock until 1997 to defer taxes,'' he said.
Employees will receive any dividend increases or stock splits that occur before they obtain the stock, he said. Unlike the company's profit-sharing plan - which limits access to funds - the contract gives the workers total ownership of the stock, so they can sell it, he said.
Philip Morris spokesman Jay S. Poole said that the company would not comment about the contract until after the union vote. Based on current trading prices, the stock grants would cost Philip Morris about $6.7 million.
Paul Grehl, director of business relations at the College of William and Mary's Graduate School of Business, said that the contract is unusual. ``I give them an A-plus for being creative.''
Grehl, a former labor relations director at General Foods, said that although such stock grants are common for managers, ``I've never heard of it at the blue-collar level.''
Giving employees some control over their pay should create more loyalty, he said.
The advantage for Philip Morris is that it provides more money to workers without raising salaries, which would increase benefit and pension costs, Spain and Grehl said.
The contract does increase pay 2 percent in its third year, 1997. It would take effect March 15. by CNB