South African mega retailer Shoprite has announced a new Black Economic Empowerment (BEE) scheme that will be implemented through a Shoprite Employee Trust.
Through this Trust, Shoprite Checkers will issue 40 million shares, valued at R8.9 billion, “for the benefit of its employees to recognise their valued contribution and ensure their ongoing participation in the Shoprite Group’s continued growth and success.”
New Shoprite BEE scheme
“The Shoprite Employee Trust has been established on a non-vesting, evergreen basis which will be primarily facilitated by Shoprite Checkers on a notional basis,” the group said on Wednesday (18 May).
“Employees who are employed in the Republic of South Africa (RSA), of which there are currently 126,000, will benefit directly through the Shoprite Employee Trust, as unitholders in the trust, whilst non-RSA employees, of which there are currently 16,000, will receive equivalent benefits through their respective payroll.
“Dividend entitlements are linked to a Shoprite Holdings dividend per share to ensure that the benefits which flow to employees are transparent and that employees recognise the tangible benefits of the Shoprite Group continuing to achieve strong operational and financial results.”
The transaction will increase the BEE ownership of Shoprite Checkers, a subsidiary of Shoprite Holdings, from 13.5 percent 19.2 percent.
The group has established the Trust on a “non-vesting, evergreen basis” to ensure Shoprite employees benefit as long-term shareholders.
“Shoprite Checkers will provide a R888 million contribution which will allow for the subscription of 10 percent of the shares to be held by the Shoprite Employee Trust with the balance of shares funded on a notional basis by Shoprite Checkers,” the group explained.
“Furthermore, an initial distribution of R77 million for the 6-month period to 2 January 2022 will be received by eligible RSA and non-RSA employees.”
The transaction will not impact Shoprite Holdings’ shareholding structure. However, it will reduce the group’s headline earnings by approximately 2.7 percent. “This is based on the initial distribution to be paid relative to the Shoprite Group’s headline earnings from continuing operations for the 6-month period to 2 January 2022,” the company added.
Approximately 97 percent of Shoprite group’s 126,000 employees in South Africa are black and 66 percent are female.
“Permanent Group employees, whose primary place of employment is in the RSA and who have been employed in continuous service in the RSA by a member of the Group for a period of at least 24 calendar months, qualify as eligible employees for purposes of the transaction,” the group said in a separate SENS statement.
“Eligible Employees will exclude those employees who are entitled to receive any long-term incentives or short-term incentives which contain a deferred component as part of their employment.”