NGX: New equity-based incentive plan for employees part of demutualisation process

The Nigerian Exchange Group (NGX) Plc says the new equity-based incentive plan for its employees conformed with the scheme of arrangement for demutualisation.

The need for clarification in the allocation of shares to its staff follows an opinionated article on NGX: Bumps now craters by The Duke of Shomolu.

The NSE had completed its demutualisation process in March 2021 following approvals from the Securities and Exchange Commission (SEC) and Corporate Affairs Commission (CAC).

NGX demutualisation comes with a range of values to the capital market, shifting from a not-for-profit organisation to a profit-making and public limited liability company owned by shareholders.

WHAT ARE THE ISSUES RAISED?

NGX shareholders, at its first annual general meeting (AGM) as a public limited company, approved the proposal by its board of directors to introduce equity-based incentives to employees’ remuneration, including an employee share ownership plan (ESOP) and a long-term incentive plan.

According to NGX, ESOP is for the benefit of qualifying employees of the exchange and its subsidiaries.

It added that the exchange will be authorised to issue and allot 200,419,990 ordinary shares of 50 kobo each out of the authorised share capital of NGX for the operation of a long-term incentive plan consisting of a deferred bonus plan (DBP) and an employee share purchase plan (ESPP).

However, the article raised concerns with reference to another piece written by the author that the “staff share scheme that was being pushed by a Board which in my estimation was not totally representative of the new Shareholding structure of the Exchange.

“I had pleaded that the idea should be at least for now shelved till a new Board reconstituted and due process laid on firm principles of internationally accepted Corporate Governance was used to pilot the scheme.

“I also got engaged by some elements within the system, who assured me that the issue would be discussed at the AGM and everything would be fine.”

Following the AGM approval, Joseph Edgar, among other related issues, said: “My people, everything is not ok o. The Exchange had not only gone ahead to implement the policy, it has even gone further to retain the Board that was lacking in true representation of its new ownership and as such lacking the legitimacy it requires to carry out far-reaching reforms needed at this time.

“These people (NGX) should better start taking themselves very seriously and do the right thing, which is to ensure very far-reaching and constructive reforms at the Exchange.

“Reforms that would better position them as a major economic driver because what we are seeing now leaves a lot to be desired.”

In a document seen by TheCable, the equity-based incentives to employees remuneration was incorporated as part of the terms, conditions, provisions and effects of the scheme of arrangement for the proposed demutualisation of the NSE.

“In recognition of the contributions of employees towards the development of the Exchange, it is envisaged that an Employee Share Ownership Plan (ESOP) will be implemented post-demutualisation. Approval of the ESOP would be obtained at an EGM of shareholders,” part of the document reads.

“The objective of the ESOP is to align employees’ interest with that of The Exchange, attract new talent, as well as retain valuable employees.”

Abimbola Ogunbanjo, NGX Group chairman, had explained the new policy further that they “are in line with the authority granted to Directors by then Members of NSE at an Extraordinary General Meeting (EGM) conducted in March 2020 and adhere to global best practices allowing us to attract and retain the best talent”.