ARM Cement’s employees buy 15% stake in company

17 July 2017

ARM’s workers have acquired a 15% stake in the company, making it one of the public listed firms with the largest employee ownership in Kenya.

The company’s latest financial statement shows that the employees acquired the stake worth Sh2.8 billion last year when the cement maker also added the UK’s CDC Group to its list of shareholders. ARM, which makes the Rhino Cement brand, has an estimated workforce of 3,000 — giving each employee an average of nearly Sh1 million shares based on the company’s share price of Sh21.7 and making them some of the richest workers in Kenya.

The actual value per worker should be much higher since not all staff participate in such schemes. ARM has disclosed details of the Employee Share Ownership Plan (Esop) in its latest annual report, but does not indicate the price at which the shares were bought.

The Esop scheme’s ownership of ARM has more than tripled from 4.13% in December 2015, an increase that came last year after the cement maker issued additional 111 million shares to the staff.

ARM employees now own nearly the same stake as Amanat Investments — the investment vehicle of the company’s chief executive Pradeep Paunrana and his family. CDC Group, with 42% equity in the cement firm, is the single-largest shareholder.

ARM’s Esop was established in 2005 and by December 2015 had acquired 20.4 million shares equivalent to a 4.13% of the company. Stock-based compensation schemes gained traction from the early 2000s as a means of aligning the interests of employees with those of shareholders. Employees can sell the shares after satisfying the rules set by their respective schemes such as the specified years of service and performance benchmarks.

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