In response to the Daily Friend article, Racial discrimination: two questions for Momentum, Momentum Metropolitan noted that the statement that ‘a benefit is being granted to all African, coloured and Indian/Asian – but not white – employees of Momentum’ is inaccurate ‘as the transaction is for all permanent SA-based staff of all races, including white’.
The company noted that initial coverage, which was subsequently corrected, conveyed an incorrect impression, and that the following statement explained the ‘empowerment transaction’.
Momentum Metropolitan’s empowerment transaction for all permanent SA-based staff – 23 October 2020
Momentum Metropolitan embraces the authentic advancement of inclusive economic transformation and the meaningful participation of black people. The transaction supports the Group in further enhancing its B-BBEE objectives through more representative ownership. The Group’s focus on broad-based empowerment through employees aligns with its growth strategy. The pursuit of economic transformation has become an important business requirement and becomes even more important in enabling sustainable new business opportunities and growth. This inclusive transaction will therefore contribute to value creation for all the Group’s stakeholders including shareholders, clients, financial advisers and employees.
Momentum Metropolitan announced a proposed transaction to strengthen its B-BBEE ownership and retain its competitive empowerment rating, a business imperative. This is to be achieved via an inclusive employee share ownership scheme that will benefit all permanent South-African based employees. This transaction is in line with the company’s inclusive and authentic approach to ownership and transformation, and includes all races.
The Scheme will benefit people from various income groups (broad-based empowerment), while honouring its entrepreneurial spirit by giving employees the opportunity to be co-owners of the business. It will be available to all current, permanent employees, as well as future employees over the next five years and will constitute 3% of the issued ordinary share capital of Momentum Metropolitan Holdings which would result in approximately 44.9-million shares being acquired for employees.
The Scheme will apply rules aligned to the Financial Sector Codes and B-BBEE Amendment Act. For this reason, black employees (that includes Indian and coloured employees as defined in the B-BBEE Codes), who currently constitute 78% of the Group’s employee base, will receive at least 85% of the economic benefits from the Scheme. Black women employees will receive 55% of the economic benefits from the Scheme.
This transaction costs the Group 10% of the full transaction value, since 90% of the transaction is funded with debt, which will be serviced and repaid through dividends and share growth. Staff therefore benefit from the 10% discount, and the extent to which the total shareholder return exceeds the cost of the debt.
Approval and implementation of the Scheme is subject to 75% shareholder approval. A vote on this will be taken at the Group’s general meeting to be held in November 2020.
*As per the B-BBEE Act“Black people” is a generic term which means Africans, Coloureds and Indians –
a) who are citizens of the Republic of South Africa by birth or descent; or
b) who became citizens of the Republic of South Africa by naturalisation before 27 April 1994 or on or after 27 April 1994 and who would have been entitled to acquire citizenship by naturalisation prior to that date.