Equity Bank Withdraws Proposed Employee Share Ownership Plan

In an unexpected turn of events, Equity Group’s proposal to implement a Sh8.4 billion Employee Share Ownership Plan (ESOP) was ignored at the bank’s AGM on Tuesday. This leads to the conclusion that the scheme was not supported by a number of significant shareholders.

The institution of an ESOP that would include 207.5 million shares, equivalent to a five percent stake, was among the special resolutions that was to be put to a vote at the AGM.

While other issues on the meeting’s agenda were approved, such as a Sh2 per share final dividend and the payment of a one-off gratuity of Sh50 million to Peter Munga, founder and former chairman; the proposal went unmentioned.

The board made the decision to shelf the ESOP prior to the AGM.

Significant shareholders may not have been consulted to garner support for the scheme, as evidenced by its publication and subsequent quiet withdrawal.

Senior managers, including CEO James Mwangi, would have gained possession of most of the shares if the scheme had been implemented.

This ESOP would have been the second for the lender after it first established a stock-based compensation before being listed on the Nairobi Securities Exchange (NSE) in 2006.

The first ESOP led to the acquisition of a 5.5 percent stake by employees that has now dropped to 3.08 percent equity and some staff cashing out their holdings.

In contrast to the second ESOP being ignored, Mr. Munga’s exit compensation garnered a unanimous approval.

The billionaire businessman shared with shareholders how he established the company 35 years ago in Kangema, Murang’ a county using a Sh5,000 investment.

He added that he had the help of 12 friends including Britam’s CEO Benson Wairegi, investment banker Jimnah Mbaru, and the late John Mwangi.

He also said he will now turn his focus to ventures in manufacturing, agriculture, and education.