Insurance firm Britam has issued 13.3 million shares worth Sh193.8 million to establish its employee share ownership plan (Esop).
The shares amounting to a 0.5 per cent stake being held under Bora Services, according to the company’s April regulatory filing of its ownership structure.
The Nairobi Securities Exchange-listed firm earlier said the Esop will be funded by part of employees’ bonuses.
“Only 80 per cent of the bonus is paid in cash while the balance is retained and paid in the subsequent three years as a deferred bonus,” Britam says in its latest annual report. “The deferred bonus will in due course be used to partly fund the ESOP in which employees will be given shares equivalent to the amount of bonus retained.”
The company’s stock-based compensation was established in 2017 and is being implemented this year. Stock-based compensation is seen as a means of aligning the interests of employees with those of shareholders. By owning stock in their company, employees are exposed to the upside and downside of their performance and decisions.
Britam says the ESOP is meant to motivate and retain staff.
The setup of Britam’s Esop comes a time when the company’s ownership structure has changed significantly after the entry of high-profile institutional investors.
The insurer has raised Sh9.2 billion from issuing new shares, equivalent to an 8.8 per cent, and a 14.3 per cent stake to the International Finance Corporation and private equity firm AfricInvest respectively.
Zurich-based insurance firm Swiss Re is also set to acquire shares in Britam equivalent to a 13.8 per cent stake from the company’s director Peter Munga.