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Kumba's simplified Share Scheme

September 15, 2020
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Julie Chandler

Employee Share Ownership (ESO) schemes are designed to reward black employees with an opportunity to own shares in the company they work for. By implementing such a scheme, black employees are able to enjoy the fruits of their labour.

Imagine this: Your name is Lindiwe. You are a 42 year old woman from a previously disadvantaged background. You grew up in a township in Kimberly and you dropped out of school in standard 7 to help support your family. There were very few opportunities available to you, but one day you heard that Sishen mine was looking for cleaners. You got the job and you have been a cleaner at the mine for 26 years.  

Now let me ask you Lindiwe: Do you know what a share price is? Ok, do you think you can tell me what a dividend is? Can you tell me what stocks are?

Stop imagining. Given her background, you’d assume that Lindiwe can’t answer these questions. Surprisingly enough, your assumption is wrong. Here’s why:  

In November 2011, 6209 lower grade employees of Kumba Iron Ore each received a pay out of R575 045 from Kumba’s employee share ownership scheme. Kumba Iron Ore’s Envision broad-based employee share participation scheme was set up after the unbundling of Kumba’s resources into Sishen Iron Ore Company (SIOC) and Exxaro. SIOC’s shares were split with 74% going into Kumba Iron Ore, 20% into Exxaro, 3% to the SIOC Community Development Trust and another 3% to the Envision Trust. The Envision share scheme then borrowed money from SOIC to buy shares on behalf of their employees in what is now South Africa’s biggest BEE transaction. Each eligible employee received share units that entitled them receive dividend payouts from SIOC profits twice a year, combined with a lump sum pay out once Envision matured.

When the time came for the lump sum pay out, Kumba needed to find an effective way to communicate the payout process and basic financial principles to the beneficiaries.

With this in mind, Kumba asked our team at Jincom to develop and create a series of 30 A5 financial literacy comics distributed weekly to all Envision beneficiaries covering topics like paying taxes, budgeting, investing, insurance and clearing your debt. Our team also created booklets on the pay-out process, its tax implications and Envision 2 as well as posters that would enable managers and supervisors to explain Envision to their teams.

All the materials used visual imagery to break down complicated financial terms and concepts and to educate the beneficiaries on financial planning, stability and security.  

As a result, Lindiwe who has been a cleaner at Sishen mine for 27 years now not only received the biggest payout of her life, but also had the know-how to make better financial decisions, and her financial future is secure. All thanks to Envision, and a little help from us.
Issue 10: Bright Future

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