[miningmx.com] – EMPLOYEE Share Ownership Schemes (Esops) are deemed to have failed black economic empowerment (BEE) with experts saying in a BDLive article that workers had almost no benefit from the schemes owing to depressed share prices.
Gavin Hartford, CEO of the Esopshop, which advises on these transactions, said that quite often the share prices of companies declined or the debt involved in creating them hadn’t been removed by the time the schemes vested.
“Esops were mostly done parallel to narrow BEE transactions. Usually 50% of dividends were used to pay debt, so the benefits were very low,” Hartford told BDLive.
“Effectively employees got almost nothing. Sometimes the debt wasn’t retired by the time the scheme vested, so they were cancelled,” he said.
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