SA’s largest food retailer Shoprite will place 40-million shares into an employee trust over the next ten years in a BEE transaction that aims to ensure all permanent workers of two years or more receive a dividend payout as if they owned the shares.
About 126,000 workers will benefit financially from the scheme, but they will not take ownership of the shares which will remain in the trust.
Shoprite is paying out R888m to buy the first tranche of shares for the newly formed trust and will purchase the remaining 90% each year over the next ten years at R222,05 per share until the trust holds almost R9bn worth in shares.
The trust scheme increases the group’s BEE black ownership component to 19.2% from 13.5%.
The group's main competitor, Pick n Pay has a 17.76% black shareholding, according to its official BEE scorecard.
Employees will be allocated “units” representing the shares according to their job level within the group and then have dividends paid to them based on the number of units they have.
Payouts will take place twice a year and correlate to what normal shareholders earn in dividends twice a year.
The link to dividends is to ensure “the benefits which flow to employees are transparent” and so they can see “tangible benefits of the Shoprite Group continuing to achieve strong operational and financial results”, Shoprite said.
The group said the scheme was to help retain staff and incentivise them to grow the business.
The first payout will be similar in value to the 233c interim dividend per share paid by Shoprite for its first financial half.
About 20,000 employees who already have short- or long-term performance incentives as part of their salary structure do not qualify for this new scheme.
This suggests the new deal will support lower paid employees such as cashiers. Shoprite said financial improvement of its employees’ lives is imperative in times of economic stress.
The 16,000 workers in Shoprite branches outside SA will be compensated financially too.
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