Kenya: KCB staff to get additional 18.4m shares

Nairobi. KCB Group workers are set to benefit from an additional allocation of 18.4 million shares through the bank’s employees share award scheme.The share issue received regulatory approval from the Capital Markets Authority last week.It is part of a total of 150 million shares that shareholders of the Nairobi Stock Exchange (NSE) listed lender approved for issue to staff in 2008. The KCB share is currently trading at about KSh23 at the NSE, from a 12-month high of KSh26.75. KCB is implementing a management restructuring plan that has seen up to a dozen senior management staff leave the bank, and is expected to turn the focus on mid-level managers. The restructuring has been drafted by international management consultancy group Mckinsey. The popularity of the Employee Share Ownership Plan (ESOP) has been growing in Kenya in recent years. It is seen as a reliable way of reducing employee turnover while motivating workers in a market where the war for top talent is getting tougher. Some of the blue-chip firms that have implemented ESOPS include East Africa Breweries (EABL), KenolKobil, Athi River Mining, Nation Media Group, AccessKenya, Scangroup, Safaricom and Equity Bank. “CEOs in Africa truly believe that they are engaged in a war for talent—where poaching of their best people by competitors is a constant threat and non-financial rewards are increasingly as important as direct remuneration,” consultancy firm PWC said in its latest Global CEO Survey. Under a typical ESOP, employees are given stock options that they get the right to exercise over a defined period of time. This vesting period ranges from three to five years. During the period employees cannot sell or transfer the stock or options. Typically, a quarter of the options in a stock option grant, for example, will vest each year for a four-year period.An employee can thereafter reap a tidy pile of capital gains assuming the shares gain value. By igniting plan participants’ interest in seeing that the company’s stock performs well, ESOPs are believed to encourage participants to do what is best for shareholders, since they themselves are shareholders.