Trustees of oil marketer KenolKobil’s employee share ownership scheme have gone to court seeking a determination as to whether the company’s former chief executive, Jacob Israel Segman, is legally allowed to take up a Sh300 million share option he had while he led the firm.
KenolKobil’s employee share ownership plan (ESOP) has published a notice indicating that Mr Segman intends to exercise the share acquisition option, more than three years after leaving the company.
The ESOP’s trustees say that under Mr Segman’s contract, he had up to three years after leaving the company to exercise the share purchase option, but that window had lapsed in July last year.
While the trustees have not contested Mr Segman’s intention to exercise the option, they have asked the court to determine whether the former CEO can be allowed to take up shares under the ESOP scheme beyond the period stated in his contract.
Mr Segman on April 26, 2017 gave his intention to exercise an option in his contract, months after KenolKobil announced that it was offering employees an opportunity to take up shares worth Sh386.1 million.
Mr Segman’s contract allowed him to acquire at least four per cent of the total issued share capital between 2007 and 2010.
Previous reports had indicated that the share option clause in his contract entitled him to take up 20 million shares.
KenolKobil on Monday traded at Sh16.50 per share on the Nairobi Securities Exchange, meaning Mr Segman could acquire up to Sh330 million worth of shares, if he successfully exercises the option that was in his contract.
“In order for the trustees to properly exercise their mandate, ensure that the interests of the trust are protected and the trustees are not exposed to personal liability. There is an urgent need for this court to determine the question of whether or not the options granted to one Jacob Israel Segman in respect of KenolKobil ESOP have lapsed,” says James Mathenge, one of the ESOP trustees.
Mr Segman, who is listed as an interested party in the suit, is yet to file a replying affidavit.
KenolKobil’s ESOP says that the window for Mr Segman to take up the share acquisition options lapsed as his letter of intention came more than six months after resigning from the firm and over three years after being offered the chance to take up a stake under the scheme.
Mr Segman resigned from KenolKobil on July 3, 2013 after serving 23 years, and was succeeded by current CEO David Ohana.
The KenolKobil ESOP trustees insist that they can only act in accordance with its executive rules that Mr Segman has disputed, forcing them to seek the court’s interpretation.
The ESOP reserve rose from Sh50.7 million in 2015, with the latest provision ranking as one of the highest in recent years.
KenolKobil’s volume of issued ordinary shares has, however, remained unchanged at 1.4 billion units, indicating that employees have snubbed previous share-based compensation schemes.