Equity Group’s bid to implement an Sh8.4 billion employee share ownership plan (Esop) was snubbed at the lender’s annual general meeting (AGM) Tuesday, indicating that the scheme did not receive the backing of a section of significant shareholders.
One of the special resolutions that was to be put to a vote at the AGM was the establishment of an Esop that would hold 205.7 million shares equivalent to a five percent stake in the lender.
The issue of new shares to employees through an ESOP may lead to the dilution of existing shares; a possible reason why Equity shareholders rejected the plan. Employee Share ownership plans are also expensive to manage.
The plan was supposed to be discussed during the bank’s annual general meeting but that did not happen. According to the Business Daily, the decision to drop the scheme was made at board level.
Equity Bank already runs an Employee Share Ownership Scheme that was established in 2006.
Through the employee reward program, the bank’s CEO James Mwangi managed to rapidly grow his investment in the bank to the current level of ownership.
The billionaire businessman told shareholders how he invested Sh5,000 to establish the company 35 years ago in Kangema, Murang’a County with the help of 12 friends including investment banker Jimnah Mbaru, Britam’s CEO Benson Wairegi, and the late John Mwangi.
Mr Munga said he will now focus on his ventures in agriculture, manufacturing and education.