Equity Group’s top executives will lead their employees in purchasing shares through a proposed stock-based compensation scheme, offering them a discounted price of 50 cents per share.
This advantageous pricing positions the staff for substantial rewards, as the company’s stock price concluded at Sh38.35 on Wednesday.
This represents an impressive premium of 7,570 percent compared to the exercise price at which eligible individuals will acquire their shares.
The bank has proposed to issue a total of 198.6 million shares with a current market value of Sh7.6 billion to employees over 10 years, subject to approval at its annual general meeting on June 28.
The employees will, however, spend an aggregate of only Sh99.3 million, setting them up for major capital gains.
Employee share ownership plan
Details of the new employee share ownership plan (Esops) have been disclosed in a circular to shareholders.
The bank’s offer makes it one of the most generous stock-based compensation plans after Safaricom which buys its shares in the open market and distributes them to qualifying staff at no cost to the workers.
The telco’s ESOP trust bought 12.4 million shares at Sh489.4 million in the year ended March 2022 to replenish shares awarded to staff in earlier years.
The directors of Equity will be at liberty to allot and issue the additional shares in tranches and on terms and conditions they deem fit.
They will, however, seek the renewal of the approval of the shareholders to allot and issue the new shares, which remain unissued at the expiry of five years.
Among the staff set to benefit from the allotment is the Group chief executive James Mwangi.
At the 2019 AGM, the shareholders had been expected to approve a similar Esop plan, but the resolution was withdrawn during the meeting at the last moment, with no explanation given for shelving it.
Staff at the bank would have been allotted 205.7 million shares valued at Sh8.4 billion at the time.
The new Esop will be the second for the bank, which first established a stock-based compensation scheme ahead of its listing on the Nairobi Securities Exchange (NSE) in 2006.