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Safaricom executives get Sh390 million free shares – Business Daily

Safaricom Plc CEO Peter Ndegwa during the release of its 10th sustainable business report on September 29, 2021. PHOTO | DIANA NGILA | NMG
Senior Safaricom managers were awarded 15.28 million shares with a current market value of Sh390 million for free in the year ended March as compensation for past performance.
The employees had cashed out 17.8 million units of stock the year before, with the company’s cumulative spending on the share-based compensation scheme standing at more than Sh4 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.
“Additionally, 15.28 million shares historically valued at Sh519.4 million (2021: 16.42 million shares valued at Sh480.7 million) vested and were exercised by eligible staff,” the telco says in its latest annual report.
The free shares and Safaricom’s long-term stock price rally have made the company’s stock-based compensation one of the most lucrative among the country’s publicly-traded firms.
The telco’s share price has, however, dropped significantly in recent months, an outcome attributed to foreign investors’ flight to developed markets that have raised interest rates to combat inflation.
The stock closed trading at Sh25.5 yesterday, slightly above the 52-week low of Sh23 recorded on June 27. The share price had rallied to touch record highs of Sh45 in August last year, helped by investor enthusiasm after a Safaricom-led consortium won a telecommunications licence in Ethiopia.
Safaricom has focused on giving high-scoring managers shares at no cost after closing a separate scheme where a more diverse group of employees was previously 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 in the open market.
Safaricom says it bought 12.4 million shares at a cost of Sh489.4 million in the year ended March as it prepares to award qualifying employees in the near future. The telco, through a trust, now holds 11.5 million shares which it bought at Sh416.2 million.
The shares will be given to senior executives for free as part of their compensation for meeting or exceeding performance targets.
The company’s chief executive and chief financial officer have traditionally taken most of the stock-based compensation.
The current officeholders, Peter Ndegwa (CEO) and Dilip Pal (CFO), were not among those who were awarded shares in the review period and the prior year, having joined the company recently.
Mr Ndegwa was appointed on April 1, 2020 while Mr Pal took office on November 1, 2020.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.