What if stock options became ethical?

 

Ethics in the payslip? After the European Union started asking questions about the size and nature of managerial salaries, and the USA became the stage of disputes over wealthy golden handshakes being handed out to CEOs (the consumer, as ever, finding himself on the loosing side), a few Italian companies have decided to hedge their bets on the ethical stock option.

The pioneer company that has headed the movement in Italy is Sabaf, one of the worldwide leaders in household gas cooking appliances. A company with a strong Csr track record, that in 2007 decided to launch an innovative strategy to make its stock options ethical. The basis of the strategy? To give Sabaf workers an incentive to increase the sustainability of the company by assigning key figures in the management structure with the opportunity of subscribing to 600 thousand Sabaf shares. The ethical catch is that if, by 2009, the team hasn’t been able to reach a set of environmental goals the amount of shares will be cut by 10%.

The goals that Sabaf has chosen to focus its ethical strategy on are environmental – reducing the amount of non hazardous waste by set targets – as well as social. Because the 10% cut will apply, even if the environmental target is achieved, if the number of regularly employed workers at Sabaf in Italy is less than 460. In other words, cutting staff as a means of increasing profits is scratched from the company logic for good.

 

Gianluca Beschi, the company’s investor relator, explains that even though the company has not yet ever managed to reach any of its economic targets, “the social environmental one’s have been hit straight on the head. A feature that certainly sets us aside from other companies and sets a track record for corporate social responsibility”. Will their best practice stimulate others to do the same? It looks like it: Indesit, an electrics company, has already started to follow suit.

 

Find out more

www.sabaf.it