AS we continue exploring the concepts of employee share option plans and other compensation schemes, we asked two leaders of companies listed on the Jamaica Stock Exchange (JSE) about how they ensure the company’s shares can be used to benefit their staff in the later years. Those two business leaders are John Mahfood and William Mahfood.

John Mahfood, CEO of Jamaican Teas Limited, listed on the Junior Market on July 12, 2010. The company offered a pool of two million shares to its employees at the time of its intial public offering, but the employees bought only 1,697,500 shares at a price of $2.90 each ($0.2416 split adjusted).

“We believe that it is extremely important to find ways to build the wealth of our staff, to make them financially independent in their retirement and to find ways that will allow our staff to own their own home. The NIS (National Insurance Scheme) does not provide sufficient funds for retirement, so it is incumbent on employers to assist our long-standing employees to be comfortable in retirement and not have to survive on handouts.”

“Generally speaking, it is very difficult for weekly paid staff to generate wealth for themselves in Jamaica due to the low levels of pay. We are committed to ensuring that our weekly paid staff will be comfortable in their retirement years.

“This can be achieved by providing pension plans and share purchase schemes. The pension plan provides a lump sum on retirement as well as a liveable pension. We offered all of our staff shares in the company when we went public and we have also offered shares to our employees every three or four years since then.

Our plan is structured as follows :

•Shares are offered at a discount of 10 per cent from the market value

•We provide an interest-free loan for three years up to the value of the shares

“The amount of the shares issued and the related loan is related to the employees salary so that the monthly repayments are not so high as to make it burdensome to the employee. We have found that the take up by the staff is very high and they look forward to the offer because they have seen the significant increase in their wealth that comes from the share ownership plan. There was not a very good understanding of the share ownership by our staff at the time of the IPO, however, this has improved over time. The improvement has come about as a result of communication from management during the years as well as word of mouth within the organisation as a result of staff benefitting directly. We have found that staff generally hold onto their shares and only tend to sell them to fund important purchases like a house.”

William Mahfood —Chairman of Wisynco Group Limited, listed on Main Market on December 28, 2018. One hundred per cent of the amounts as assigned by the directors of Wisynco was allotted. There were 112,500,000 shares available at $7.08 per share.

“One of the main reasons Wisynco listed was to give our employees a way to benefit in the company. This wasn’t only at the senior executive level but every level to give them the opportunity to be shareholders and participate in the company’s growth and development. The people in any organisation are the ones who drive the performance and service levels. Without the people, the motivation, drive and culture, long term organisations can’t last. Listing allowed us to engage our employees in a way that they have never been engaged through direct ownership of the company’s stock.”

“When we started the process prior to our IPO, I would say 95 per cent of employees had no investment accounts. With NCB Capital Markets, we brought in NCBCM teams all over the island in various departments to setup the accounts for all of our people who indicated that they wanted to invest. We also did a tremendous number of meetings and townhalls, and I personally attended them with every level of staff to make them aware of the benefits of becoming a shareholder. They’d be able to receive dividends every year, participate in the same way other shareholders participate, attend AGM’s and ask questions of management if they had any issues or concerns. I think that was one of the reasons why we had a high take up. We facilitated them to open investment accounts, but also the townhall meetings to make them aware and educated about the benefits of owning shares.”

“Wisynco has an employee stock option plan. When Wisynco listed in December 2017, we had put up $800 million worth of shares which we had offered to our employees at a 10 per cent discount. We had a very high take up and if we had 1,300 employees at the time, I think 900 of them took up the offer. Some didn’t exercise the full amount they were entitled to, but a lot did. I think many of them are very happy about that as they would have bought those shares at $7.08 and the share price had gone as high as $28.

“When we did the IPO, we mentioned in the prospectus that we intended to put in a long-term incentive plan for senior leadership. This has been implemented since 2020. Every year, the company has a block of shares in treasury that are basically subject to certain conditions. One those conditions are meet, the company will then offer to employees and senior leadership based on their performance. Let’s say like in June 2021, the price would be fixed at the average price at the close of our financial year with a nominal discount. The vesting period is 30 months from the time of the option. Part of this is an incentive to stay and motivation tool to ensure persons who are performing in the organisation are rewarded through these shares. They have the option to purchase these shares and have three years to exercise their options. The share price could be $30 and they could purchase at the option price of $15 once they’ve vested and participated in the programme.

“At least it gives them the option to say in 10 years of working at Wisynco, a senior executive or leader might own one million shares in the company and say that through my hard work and dedication, I saw this company grow and watching my investments grow as I reap the benefits of it. At the end of the day as a large company listed on the stock exchange, you want your employees to be engaged through ownership. It gives them the motivation to see the company be highly successful. Every company who has these types of schemes should definitely make every effort to try and get their key people participated.”