Senior Safaricom managers were awarded 15.5 million shares with a current market value of Sh426 million for free in the year ended March as compensation for their past performance.
The employees had cashed out 15.1 million units of stock worth Sh415 million the year before, with the company’s cumulative spending on the share-based compensation scheme standing at more than Sh3 billion.
The Nairobi Securities Exchange-listed firm buys its own shares in the open market and allocates them to specific employees who eventually take ownership three years later when they are free to sell the stocks or continue holding them in their personal accounts.
“Additionally, 15.5 million shares historically valued at Sh347.3 million … vested and were exercised by eligible staff,” Safaricom says in its latest annual report.
The free shares and Safaricom’s long-term stock price rally has made the company’s share-based compensation one of the most lucrative among NSE-listed firms.
In the review period, the company bought an additional 9.24 million shares at a cost of Sh250 million, with the stocks to be distributed to the qualifying individuals after three years.
The company, through a trust, currently holds 21.83 million shares acquired at a cost of Sh570 million. The shares now have a market value of Sh600 million based on the telco’s stock price of Sh27.5.
Safaricom has focused on giving high-scoring managers shares at no cost after closing a separate scheme where a more diverse group of employees were offered an opportunity to buy shares at a fixed price of Sh5.4 each. Unlike other employee share ownership plans (Esops), Safaricom’s has not diluted investors since the stocks are bought from the existing pool in the open market.
Credits: Business Daily