SOUTH AFRICA – Food and beverage company PepsiCo sub-Saharan Africa (PepsiCo SSA), has launched Bašumi Trust, a R1.6 billion (US$109m) Broad-based Black Economic Empowerment (BBBEE) employee share ownership plan (ESOP).
The establishment of the trust forms part of the public interest commitments made to the South African government at the time of PepsiCo’s acquisition of local Pioneer Foods in 2020 to support broad socioeconomic imperatives of employment, empowerment and talent development.
The Bašumi Trust complements Pepsico SSA’s recently launched Kgodiso Development Fund, which aims to benefit local suppliers and emerging farmers through a R600-million (US$40.9m) 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.
The trust owns R1.6 billion (US$109m) in shares in the US giant PepsiCo, which is listed on the Nasdaq in New York.
Each participant, who are the employees, are 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.
It is designed to create the most beneficial outcome, maximising the long-term economic benefit to the about 11 000 beneficiaries of the trust.
Describing the structure of the trust as “novel”, PepsiCo SSA CEO, Tertius Carstens said, “Unlike a typical ESOP structured to distribute lump-sum pay-outs after a set vesting period, the Bašumi Trust, uniquely offers our employees the immediate financial benefit of a dividend together with the surety of future milestone distributions.
“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, with external partners fulfilling the trust administration, banking and auditing roles.
Other company’s such as Coca-Cola Beverages South Africa and South African Breweries have also offered employees a slice of the companies’ shares through establishment of Ikageng Employee Share Trust and SAB Zenzele Kabili respectively.
SAB Zenzele Kabili was launched in April 2021, holding R5.4 billion (US$371m) worth of AB In Bev’s shares while Coca-Cola’s Ikageng, was launched in May 2020, owing a 5 percent stake in Coca-Cola Fortune, the CCBSA’s parent company.