Edcon shareholders today voted in favour of the creation of a staff empowerment trust. 18,000 permanent and permanent-part time employees of the company, of whom 94% are black, receive an allocation of units in the Edcon Staff Empowerment Trust. These units will entitle the holders thereof to semi-annual empowerment payments.
The vote was approved at a special general meeting held after the conclusion of the Edcon Annual General Meeting. The A shares will be allocated to the Edcon Staff Empowerment Trust on or about 21 July 2005 and will confer voting rights, equivalent to the voting rights attached to the ordinary shares, over 10,6% of the company.
"Eligible staff can look forward to receiving their first empowerment payment, the value of which is directly linked to Edcon's dividend declaration, in January 2006," said Edcon Chief Executive Steve Ross.
Approximately 93% of the value created in terms of the transaction will accrue to Edcon's black employees. The cost of the transaction to Edcon will be approximately 2,9% of its market capitalisation (at R277/share) or 5% of its headline earnings.
"It is gratifying that our shareholders support this initiative to empower our employees. It is an acknowledgement that the future prosperity of the country and the company hinges on the positive transformation of South African society," Ross said.
"In that context this Staff Empowerment Trust should be seen as an investment rather than a cost."
Currently an estimated 16% of Edcon's ordinary shares are owned by black shareholders through pension/provident funds and unit trusts.
Ross emphasised that the Trust is another step along Edcon's path to transformation which incorporates the key pillars of employment equity, preferential procurement and social development, in addition to company ownership. He indicated that the company is in the process of finalising a revised procurement policy after a long period of research.
"During our 2005 financial year we spent in excess of R23 million on corporate social investment initiatives.
We continue to exceed our internal targets for equity with 87% of staff and 57% of management now black," Ross said.