CEOs strike riches through share options


Edgars MD Linda Masterson

AT least nine chief executive officers (CEOs) whose companies are listed on the Zimbabwe Stock Exchange (ZSE) are now ranked among the top 20 shareholders in their respective firms after acquiring the stocks through share option schemes.
A perusal of the Central African Stock Exchanges handbook for 2015 show an interesting trend whereby an increasing number of shareholders have been using share option schemes to incentivise their executives to perform.
Offering management stock options is seen as a way of encouraging executives to work harder towards increasing shareholder value although there have been concerns that CEOs may end up taking unnecessary risks to drive up the share price especially in those companies where managers are rewarded for growing the underlying stock price.
Ariston Holdings CEO, Paul Spear is one of the top executives who have benefited from share options. As of 2014, he held 1,6 million shares in the horticultural firm, representing 0,2 percent of its total shareholding.
General Beltings CEO, Wilbroad Tsuroh, held almost two percent of the company or 10,5 million shares in the period under review while Dairibord Holdings boss, Anthony Mandiwanza held stock of about 2,7 million shares, representing almost one percent shareholding.
Mandiwanza assumed leadership of the milk processor in 1996, which means he has been at the helm of the group for 20 years.
Other CEOs whose shareholding thrust them among the top 20 shareholders in their respective companies included Linda Masterson, who heads clothing chain Edgars; SeedCo boss, Morgan Nzwere; and Solomon Tembo, the chief operating officer at insurance group, ZIMRE Holdings Limited.
Caroline Kangara, the company secretary for cable-maker, CAFCA Holdings Limited, is also among the top 20 shareholders in the business.
In the case of Edgars, Masterson automatically qualifies for the scheme if she achieves a certain share price target.
“In Zimbabwe, the share option scheme at Edgars has a target price,” said one local analyst.
“In other schemes, they are just giving shares to CEOs, but the overall goal is for them to improve the share price and add value to shareholders. Where you have a target as the CEO, you will be pushing to get premium compensation when you retire,” the analyst added.
Interestingly, some of the companies on these schemes have experienced mixed fortunes.
Ariston, one of the country’s largest horticultural outfits, is currently under a cautionary.
The company has closed a loss-making unit ahead of consummating a transaction with Origin Limited, which controls 68 percent shareholding in the company.
The deal, which would be by way of debt-to-equity swap is critical in turning around the company’s flagging fortunes.
Its full year results for the period ended September 30, 2015 showed continuing operations posted a US$1,7 million post tax loss from a US$1,5 million profit during the comparative period the previous year.
The General Beltings stock has been disappointing as well although the group is optimistic of a happy turn.
CAFCA, during the full-year ended September 30, 2015, managed to grow its monthly volumes to 300 tonnes per month after “vigorously” pushing exports and increasing working shifts.
This was certainly one of the few cases of growth in a market that has been undermined by an economic crisis that has ruined industries, with many collapsing while others are tottering on the brink of closure.
DZL has been making steady progress towards recovery following a brief period of stunted growth.
At SeedCO, Nzwere’s headaches have shifted from debts previously owed by government, which have been settled, to the threats posed by the deadly El Nino weather phenomenon that is threatening African countries with one of the worst droughts in living memory.

Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette