December 8, 2008: The proposed concession agreement with YRC contains a provision to set up a trust with stock warrants equal to 15% of YRCW’s outstanding stock. What does this mean for Teamsters?
Freight FAQ: Click on the image to download a leaflet answering Frequently Asked Questions on stock warrants.Here are some answers to frequently-asked questions about this part of the Yellow Roadway concessions deal.
What is a stock warrant? It is an option to buy YRCW stock at a future date, at a locked-in stock price equal to the price on the date (approximately Jan. 1) the deal becomes effective.
Would I own some YRCW stock? No. First, this warrant would be held by a trust, not by individual employees. Second, it is not stock ownership, but an option to buy, if the stock goes up.
How much is it worth? The warrants cover stock worth about $48 million. However, it is worth zero unless the stock goes up, because the warrant value equals the future stock price minus the locked in stock price. Thus, if YRCW stock doubles in value, the warrants would be worth about $48 million.
How much would YRCW stock have to go up to make it equal to our concessions? Over the next 4.25 years, Teamsters, under the proposal, would concede over $1 billion dollars. If YRCW stock goes up by 2100 percent, then the warrants would get to the range of the concession value. Obviously, no one in their wildest dreams would expect that kind of skyrocketing stock price.
If a trust holds the warrants, what do I get? The trust is free to exercise the options anytime after Jan. 1, 2010 up until 2018. Thus if the International Union decides to exercise the warrants at some point, and the stock has gone up, the money will be paid out to YRCW employees on a basis of how much the employee made in wages. So, if the stock goes up, YRC Teamsters will get a check at some point in the future. How much you will get depends on how much it goes up. If YRCW stock doubles in value, each Teamster will get an average of about $1,200. Each employee would concede, on average, about $26,000 over the next 4.25 years.
Click here to download this FAQ as a bulletin you can post and distribute to other Teamster members.
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