High Court judge, Francis Tuiyot, on Friday, last week, ruled that the lender should pay Samuel Gachie Kamiti Sh79 million ($790,000).
High Court judge, Francis Tuiyot, on Friday, last week, ruled that the lender should pay Samuel Gachie Kamiti Sh79 million ($790,000) which was part of the cash he was to receive after leaving the Equity’s Employee Stock Ownership Plan (Esop) eight years ago.
The bank, which laid off the highest number of staff -- 400 workers -- last year, had introduced Esop in 2005, a type of employee benefit plan intended to motivate employees through ownership of the company.
Mr. Kamiti told the court that he had invested in shares that would have seen him walk away with Sh103,274,010 at the time of leaving in 2010 but the bank refunded him only Sh24,330,000 through a credit transfer into his account.
Judge Tuiyot sided with the complainant and faulted the bank and the trustees for changing the rules governing Esop which effectively cut Mr Kamiti’s entitlement without informing him in advance.
“The bank and trustees did not advise him on the implication. They were at the very least cynical. They watched a unit holder make a decision that would substantially reduce the value of his redemption without telling him that the rules have changed,” said Mr Tuiyot.
Under the amended rules Mr. Kamiti could not get market value for his units if he resigned from the bank and the lender and trustees were well aware of this but did not bother to inform the former employee.
“This is not how responsible and well-meaning trustees ought to act,” said Mr Tuiyot, adding that the deed of variation was invalid.
According to the evidence presented in court one unit in the ESOP was equivalent to one share in equity bank.
Over time, Mr Kamiti purchased 6,557,080 Esop units, which was translated to 6,557,080 shares in the bank. As at the close of business on March 2, 2010, one share of Equity Bank traded at the Nairobi Stock Exchange at Sh15.75.
The Judge, upon evaluating the evidence before the court, concluded that the deed of variation had not been approved by March 2, 2010, when Mr Kamiti resigned and sought to redeem his units.
“As there is no evidence that the deed of variation was submitted to the Authority and approved before March 2, 2010, the terms, therefore, could not be effected as against Mr Kamiti,” he said.
The Friday ruling opens doors for other former Esop members who may have also forfeited cash after the bank applied a contested law.