Ex-Safaricom staff miss out on Sh328m worth of shares

Members of the public queue to open CDS accounts ahead of Safaricom IPO in 2008. The firm has consistently traded above Sh5 since last December. FILE 

By Victor Juma

In Summary

• 36 million shares already bought by Safaricom staff are set to begin trading at the Nairobi Securities Exchange from October 1.
• The telco’s workers buying the stocks at the moment are recording double digit capital gains, translating into instant profits should they opt to sell immediately.

Tens of Safaricom staff who left the firm over the past three years have missed out on an employee share ownership plan (ESOP) that would have seen them acquire stocks worth Sh328 million in the telco.

In February 2010, Safaricom set aside 101 million shares for its employees at a grant price of Sh5.4 per share, which is 48 per cent cheaper than the current trading price of Sh8.

The options vested in February after a three-year period, with only 69 million shares qualifying for the ESOP plan after the exit of a number of staff that saw them forfeit a total of 41 million shares in the compensation scheme.

“As at February 2013, only 69 million shares qualified for purchase by the employees,” Nzioka Waita, Safaricom’s director of corporate affairs , said in a statement.

“Under the terms of ESOP, staff members could not exercise the shares before February 2013 and the employee had to remain employed with Safaricom (until that time).” Mr Waita said that the telco’s employees have so far bought 36 million of the qualifying shares, with the remaining 33 million expected to be bought over the next few months. The offer closes on February 26, 2014.

The 36 million shares already bought are set to begin trading at the Nairobi Securities Exchange from October 1.

(READ: Safaricom staff shun ESOP over low share price)

The lower-than-expected ESOP uptake means that the scheme is now likely to cause a dilution of existing Safaricom investors of only 0.1 per cent, down from 0.25 per cent if all the 101 million shares had been bought.

Share compensation

The smaller ESOP also means that the value of the stock earmarked for workers’ share compensation has dropped to Sh552 million from the previous Sh808 million based on the current trading price.

The telco’s workers buying the stocks at the moment are recording double digit capital gains, translating into instant profits should they opt to sell immediately.

Safaricom has consistently traded above Sh5 since December, with its current price of Sh8 representing a 102 per cent gain over the past 12 months and offering an instant capital appreciation to those buying at the grant price.

The listing of the remaining 33 million shares in the ESOP scheme will further enhance Safaricom’s position as the most liquid counter.

Safaricom has maintained the distinction of being the company with the largest number of issued shares at 40 billion since its listing on June 9, 2008 through an initial public offering price of Sh5.

A section of its shareholders have in the past pressed for a buyback of some of the shares seeking a reduction of the liquidity to further drive up the price.