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CBA staff to get Sh870m stake in merger with NIC

NIC Bank branch in Nairobi
NIC Bank branch in Nairobi. FILE PHOTO | NMG 

Employees of Commercial Bank of Africa Group (CBA) are set to emerge with a 1.32 percent stake worth Sh870 million in the merger between the lender and rival NIC Group #ticker:NIC .

NIC, which currently has no employee share option plan (Esop), will create one to accommodate workers of CBA that has been running this scheme.

NIC, listed on the Nairobi Securities Exchange (NSE) #ticker:NSE , will be the vehicle to house the ownership of the merged entity in which CBA will take a 53 per cent stake.

“We note that currently, CBA has an Esop (share allotment) for the benefit of its employees which holds 2.5 per cent of the shares of CBA which will translate into a 1.32 per cent shareholding in the post-merger share capital of NIC,” the listed firm says in a circular to shareholders.

“It is this allotment that the board proposes to roll into an NIC Group Esop.”

Besides CBA staff who are already entitled to shares under their current employer, the scheme is expected to admit more members including current NIC employees following completion of the merger.

For existing employees of the privately-held CBA, the new scheme will give them an easier means of selling their shares on the stock market.

Share-based compensation schemes are seen as aligning the interest of workers with those of shareholders. By owning stock in their company, employees are exposed to the upside and downside of their performance and decisions.

KenolKobil’s CEO David Ohana, for instance, recently made a Sh1.1 billion profit from selling his Esop shares to French multinational Rubis Energie in its recent buyout of the oil marketer.

Mr Ohana, who is exiting the helm of the oil marketer, is credited with turning around the company and settling its legacy problems including lawsuits.

The collapse of ARM Cement, meanwhile, has destroyed the value of stock options worth hundreds of millions of shillings held by the company’s former executives Pradeep Paunrana and Surendra Bhatia.

NIC says the Esop will provide an additional means of rewarding employees, boost staff productivity, help attract top talent and align workers’ interests with those of the company.

“The directors of NIC consider that the creation and implementation of an Esop following completion of the merger is in the best interests of NIC and its employees,” the company said. in the circular.

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