As the pay gap between CEO and median employee earnings continues to increase, African solar energy company Fenix International is burning the outdated rulebook on traditional employee stock options.
It announced the first cash payout to its employees across Africa, with mid-level and low-level workers set to benefit.
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How successful will the scheme prove to be, and could it be a template for other companies in their pursuit to improve workforce productivity?
How do employees benefit from Fenix Flames?
The solar energy supplier’s ‘Fenix Flames’ programme provides additional benefits as an alternative to traditional ownership options.
The scheme was designed to offer a cash payout in the event of an acquisition or public listing.
Following global energy company Engie’s acquisition of Fenix International, all 350 African employees across all sectors will profit.
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By GlobalDataFenix International CEO Lyndsay Handler said: “At Fenix, we believe that employee ownership is powerful. Fenix Flames drive the team to go above and beyond to achieve our long-term goals, to collaborate across traditional department lines, to operate with integrity and to achieve profitability.
“We spent over two years working with lawyers, investors and financial advisors to carefully craft the Fenix Flames programme and all of this hard work has paid off today.”
The novel ownership scheme was created to ensure all full-time Fenix employees benefit from the company’s increased performance and value creation, including in the event of an acquisition or IPO transition.
Longer-serving employees may receive up to two to five times their gross annual salary.
Employee ownership as a novel concept in Africa
The average Ugandan earns as little as $1.50 per day. A core part of Fenix’s mission is reportedly to create a lasting solution for the African market, as well as to ensure long-term interest in the business.
Fenix says it wants to attract and retain the best talent, and the scheme has already proved to be a strong performance driver for the solar company’s rapid expansion.
Fenix global sales and marketing director Chris Bagnall tells Verdict: “The idea of employee ownership is not that unusual in the Western world, but in the African markets where Fenix is operating, the concept is alien to most people.
“The idea that all employees – whether they are senior salespeople or chefs and guards – share in the benefits of a company doing well is practically unheard of. This is a business environment where even employee benefits like healthcare insurance are rare.
“The appetite for Fenix Flames came directly from our employees on the ground in Africa – one stood up in a general meeting and asked whether he could buy shares during a discussion on fundraising – and this was the catalyst which really brought the scheme to life. This was always a business model contextualised for our market.”
Meeting stakeholder needs
One company operating a traditional employee stock scheme is South African retail pharmacy company Clicks Group. It announced in February that, due to a four-fold increase in company share prices, nearly 8,000 full-time employees will benefit from R1.3bn employee share ownership payout, as well as a further R100m donation to the Clicks Foundation for Educational bursaries.
Fenix is unique, however, in that it will provide employees with additional assistance such as increasing professional development, comprehensive health insurance, parental leave, and other non-pecuniary benefits.
Fenix national sales manager Denis Mutti spoke of his decision to join Fenix, and the benefits he receives:
“Alongside being a part of the company’s growth and helping to change the lives of millions of people, I have also been able to earn Fenix Flames, which are enabling me to acquire a property in Kampala–a dream come true.
“Only one in a million companies would do this in Africa. Now that the ENGIE acquisition is finalised we will all be working hard to take Fenix to the next level.”
Asked whether Fenix had any issues with implementing the scheme, Bagnall tells Verdict:
“There were a number of challenges involved in getting the scheme up and running, and those challenges stemmed from all stakeholders in the business, from top investors down to the newest employees. The first step was getting buy-in from existing investors, helping them to understand how it affected their existing holding; setting up the legality of the ownership structure.
“Then it was about communicating something so unprecedented to employees. Helping employees to make wise financial decisions with the payout when it came was also a big area of focus.
“Many are receiving an injection of cash that is bigger than they have ever seen before. Helping them to make smart investment and financial planning decisions was very important.”
Fenix Flames as a trailblazer for other companies
Bagnall explained that demonstrating the viability and impact of the programme on regular employees was just the beginning. He tells Verdict:
“We are currently speaking to a number of interested companies. Some have created employee ownership that will be launched very soon and others are designing theirs now. We hope to see a vibrant business community with many more inclusive employee ownership programmes across Africa.
“However, we do want to inspire other companies that they can put together their own versions of this kind of programme, and hope that others will develop solutions equally suited to their markets and businesses.
“When you do implement such a programme, it transforms the way you interact with your employees forever and in a way that an annual salary could never do. We want others to benefit just like we did.”
