Safaricom managers received 16.4 million shares with a current market value of Sh. 700 million for free. The managers got these shares in the financial year ended March 2021.
The share allocation was termed as compensation for their past performances at work. This came even as the employees had cashed out 17.8 million units of stock worth Sh. 763 million the year before.
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Following this share allocation, Safaricom’s cumulative spending on the share-based compensation scheme now stands at more than Sh. 3.5 billion. “Additionally, 16.42 million shares historically valued at Sh. 480.7 million (2020: 17.83 million shares valued at 438.6 million) vested and were exercised by eligible staff,” an annual financial report by the firm said.
In its share reward program, Safaricom buys its own shares in the open market. It then allocates these shares to specific employees. These employees are allowed to take ownership of the shares they have been allocated after a period of three years. This is the time when they are allowed to cash them in if they so wish.
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“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 Sh. 5.4 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,” a report on the share allocation that appeared in a local daily said. “Safaricom says it bought 14.9 million shares at a cost of Sh. 440.2 million in the year ended March as it prepares to award qualifying employees in the near future. The telco, through a trust, now holds 15.43 million shares which it bought at a cost of Sh. 446.2 million. The shares will be given to senior executives for free as part of their compensation for meeting or exceeding set performance targets.”
