NAIROBI, Kenya, Mar 26 – Equity Bank is set to establish an Employee Share Ownership Scheme in an effort to boost employee performance.
In the proposed move, five percent of the bank’s total shareholding will be released to employees.
According to Equity Bank Chief Executive Officer Dr James Mwangi, the move will give the bank’s 5,000-strong staff a sense of ownership and motivate them to put in more effort and drive the business even further.
“It drives performance and is more of a reward system or what most people call bonus,” Dr Mwangi said.
The bank has already received the go-ahead from the Capital Markets Authority and approval from shareholders during the sixth Annual General Meeting held on Friday.
The move is also aimed at protecting the bank from errant employees who would otherwise use confidential material against it.
“Employees always have information ahead of everyone else so once you put them into a vehicle we are calling the Employee Share Ownership Scheme then you are able ensure those abuses don’t take place,” he said.
Equity bank staff will be required to work at the firm for not less than five years. Should one leave before the five years, they will only be entitled to refunds at the price at which they bought their shares.
“If you leave before, you cannot get them at their current market value because you are supposed to get it as a reward,” Dr Mwangi explained.
At the close of trading on Friday, Equity’s share was valued at Sh15.65.
Telecoms giant Safaricom has also expressed interest in an Employee Share Ownership Plan, which will enable staff to increase their shareholding in the firm.
Employee-owned companies in the United States of America often adopt profit-sharing where the earnings of the company are shared with staff. They also often have board of directors elected directly by the employees.