Staff at the Kenya Wine Agencies Ltd (Kwal) have largely shunned an employee stock ownership plan offered to them in January last year under the company’s privatisation.
Employees at the wines and spirits maker have so far bought an insignificant portion of the 3.84 million Kwal allocated for staff at a price of Sh34.46 a piece, according to the State agency overseeing the sale.
Privatisation Commission chief executive Solomon Kitungu said the government is designing strategies to boost uptake of the employee benefit plan.
“The uptake has been slow. We’re working on it,” Mr Kitungu told the Business Daily.
Kwal chairman Njoroge Nani Mungai declined to disclose the reasons behind the snubbing of the offer by the company’s 235 employees. The offer was due to close in May 2016.
“I don’t have any details. I’m not going to comment on it. Call the company secretary,” said Mr Mungai in response to our queries. The government appointed the lawyer to chair the Kwal board in March 2016.
It is not clear whether the poor uptake has something to do with inability to raise the Sh132 million required to take the whole stake or Kwal employees’ assessment of the prospects of the company.
Strategies employed by other firms to boost purchase of their staff stock ownership schemes include offering discounts to employees, arrangements for financing, or providing for salary check-off to buy the shares.
The price given to Kwal staff is same as what South African firm Distell paid in 2014 when it acquired a 26 per cent stake for Sh860 million at the firm.
The Treasury was set to rake in Sh132.3 million if the staff share sale at Kwal is fully taken up.
The privatisation body did not disclose the allocation method to be applied on buying the shares, but said it will ensure the sale benefits all workers at Kwal.
The poor uptake of the ESOP is reminiscent of when Safaricom employees in 2012 shunned the telco’s staff share scheme price at a fixed rate of Sh5.40 apiece.
They figured the shares were cheaper at the Nairobi bourse where it was then trading at Sh3.80 per share.
The government, through the Industrial and Commercial Development Corporation (ICDC), previously owned a 72.65 per cent shares in Kwal.
State-owned ICDC now remains Kwal’s majority shareholder with a 42.65 per cent stake, Centum (26.43 per cent), Distell (26 per cent) while employees have four per cent set aside for them.