EABL staff shares drop by Sh340m

Beer production line at the EABL plant in Ruaraka, Nairobi. 

Photo credit: File | Nation Media Group

The value of shares held under listed brewer EABL’s Employee Share Ownership Plan (Esop) has fallen by Sh340.6 million based on present versus acquisition cost, reflecting the fall in the company’s share price over the past three years.

EABL’s annual report for 2023 shows that it held 3.82 million shares under the plan — otherwise known as Treasury shares — which it acquired at a cost of Sh836.8 million equivalent to an average of Sh219.22 per share.

The market value of these units going by the company’s Friday closing price of Sh130 per share is Sh496.2 million.

“Treasury shares are shares in East African Breweries Plc that are held by the EABL Esop for the purpose of issuing shares under the Group’s share ownership scheme...Treasury shares are recognised at cost where cost is determined to be the purchase price of the shares in an open market (Nairobi Securities Exchange). Shares issued to employees are recognised on a first-in-first-out basis,” EABL said in the report.

During the year to June 2023, EABL added 224,735 shares to the Esop pile, spending Sh35.96 million on the purchase — an average of Sh160 per share. In the previous reporting period, the company had acquired 793,700 units at a cost of Sh126.93 million.

In the period, employees exercised their option on 27,332 shares, valued at Sh4.37 million, an increase on the 23,170 units valued at Sh3.64 million that they took up in the year to June 2022.

Esops are regarded as fringe benefits to boost staff productivity, reward, retain and attract talent, and are issued subject to the approval of the Capital Markets Authority.

Firms with such stock-based compensation typically issue the shares at a discount to qualifying employees, although other companies, such as Safaricom, buy shares in the open market and allot them to staff for free.

EABL’s Esop, according to the annual report, has three plans which include an executive share option plan that gives an employee room to buy units at a future date at a fixed price, which is set at the time when the option is granted.

Effective 2020, EABL also offers restricted share units, which are offered to employees for free on the grant date.

It also offers an employee share save scheme through which eligible employees save a fixed amount over a three-year period and thereafter an option to buy shares at a future date at a fixed price set at the grant date. The price of such shares is fixed at 80 percent of the market price at grant date.

The vesting period for the options is three years, after which an employee can exercise the option within seven years with no performance conditions attached to the share plans.

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Note: The results are not exact but very close to the actual.