PepsiCo sub-Saharan Africa launches employee share ownership plan

5th April 2022 By: Marleny Arnoldi - Deputy Editor Online

Snack and beverage group PepsiCo Sub-Saharan Africa (PepsiCo SSA) has launched a R1.6-billion broad-based black economic empowerment employee share ownership plan (Esop), The Bašumi Trust.

The trust is the culmination of months of planning, financial modelling and engagement with many stakeholders, and marks the beginning of what PepsiCo SSA CEO Tertius Carstens describes as a “fruitful journey” for all qualifying employees.

PepsiCo SSA vowed to the South African government it would support broad socioeconomic imperatives of employment, empowerment and talent development at the time of its acquisition of Pioneer Foods in 2020.

The Bašumi Trust complements Pepsico SSA’s Kgodiso Development Fund, which aims to benefit local suppliers and emerging farmers through a R600-million investment in programmes to promote opportunity and growth in South Africa.

While the Kgodiso Fund is focused on industry empowerment, the Esop is focused on employee empowerment.

Carstens says the Bašumi Trust was designed to create the most beneficial outcome, maximising the long-term economic benefit to the about 11 000 beneficiaries of the trust.

“It became clear during the initial stages of design, that what we were attempting to implement with this Trust was something novel and unprecedented in terms of an Esop.

“We believe that this ownership plan meets both the letter and the spirit of South Africa’s Competition Act, in so far as it relates to public interest commitments, and the overall requirement for meaningful financial participation and inclusion for workers.”

The trust functions independently and is governed by a board of trustees, made up of three union-appointed trustees, one representing non-union employees, and one employer-appointed trustee.

Essentially, the Bašumi Trust has acquired common stock in PepsiCo, which is listed on the Nasdaq in the US, to the value of R1.65-billion. Each participant is allocated one unit in the trust and they receive proceeds from the shares in the form of annual dividends and milestone distributions.

Milestone distributions are paid after four years’ participation in the scheme and thereafter every five years of completed participation.

The trust remains active for as long as it holds shares. Unlike a typical Esop structured to distribute lump-sum payouts after a set vesting period, the Bašumi Trust uniquely offers employees the immediate financial benefit of a dividend, together with the surety of future milestone distributions.

“Both of these have the potential to positively impact the lives of employees and the households they support,” Carstens concludes.