Senior executives of listed brewer EABL were awarded shares worth Sh125.22 million in the company’s British parent Diageo Plc in the year to June 2024, representing a decline of 20 percent from the value of the previous year’s stock-based compensation.
The British firm awards its senior executives the stock as part of its non-cash remuneration plan, with the award schemes linked to the performance of its share on the London bourse.
In the year to June, the Diageo share shed 26 percent to £24.90 (Sh4,230), but share awards normally have a longer vesting period.
“The costs associated with these schemes are recharged to the company and accounted for as part of staff costs,” said EABL in its annual report for 2024.
EABL also runs its own three stock-based compensation plans, which are not linked to performance. The first is an executive share option plan (Esop), in which executives are offered an option of buying shares at a future date, at a fixed price set at the time of the grant.
The second plan, referred to as the restricted share units (RSU) scheme, sees the company offer qualifying employees free shares, in a strategy aimed at helping retain key talent. This scheme was introduced in 2020.
The third plan, called the employees share save scheme (ESSS), offers employees a chance to save a fixed amount of money over three years and utilise these savings to buy shares at a future date. The price of the units is fixed at 80 percent of the EABL share at the date of grant.
The vesting period for the award plans is three years, with employees having up to seven years after the vesting date to exercise their option.
To fund the plans, EABL buys and holds its own shares— known as treasury shares— for future awards to qualifying employees.
By the end of June, the company held 4.18 million shares under the employee reward scheme, valued at Sh613.6 million at the time. This was an increase from 3.82 million units in June 2023, valued at Sh836.8 million at the time.
There were no options exercised in the company’s 2024 financial year, while employees had taken up 27,332 units in 2023, valued at Sh4.37 million.
Employee share ownership plans 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.
For EABL, the share awards, both at the local and parent level, form part of the company’s overall employee benefits expense, which also includes salaries, pensions, and other statutory contributions.
EABL’s overall employee costs stood at Sh14.14 billion in the year to June, up from Sh13.5 billion in the previous period.
