Almarai, a leading food and beverage company in the Middle East, announced a significant strategic move: its board of directors has recommended the purchase of up to 10 million of its own shares as treasury shares under its long-term employee incentive program. This step reflects the company's vision of valuing its human capital and linking their performance to the company's sustainable growth.
General context and importance of the decision
Founded in 1977, Almarai is one of the world’s largest vertically integrated dairy companies and plays a pivotal role in achieving food security in Saudi Arabia and the region. Adopting equity-based employee incentive programs is a common practice among major global companies listed on developed stock exchanges. These programs aim to achieve several strategic objectives, most notably retaining key talent, motivating employees to achieve exceptional performance, and aligning employee interests with those of shareholders, thereby fostering a sense of shared ownership and driving the company’s long-term goals.
Purchase and financing details
According to a statement issued by the company and published on the Saudi Stock Exchange (Tadawul), the number of shares recommended for purchase is 10 million, currently representing 0.9% of the company's total shares of this class. Almarai clarified that the purchase will be fully financed from the company's own resources, reflecting its strong financial position and its ability to execute such initiatives without external financing. This financial confidence is a positive indicator for investors regarding the company's stability and operational efficiency.
Legal framework and required approvals
This recommendation will only be implemented after obtaining approval from the upcoming Extraordinary General Assembly, the date of which will be announced later. The acquisition is subject to the strict regulatory requirements stipulated in Paragraph 4 of Article 17 of the Implementing Regulations of the Companies Law pertaining to listed joint-stock companies. These requirements include the company meeting the solvency criteria and submitting a detailed report from the company's auditor confirming its ability to complete the acquisition without impacting its other financial obligations. It is worth noting that the treasury shares held by the company will not have voting rights at the General Assembly meetings of shareholders, nor will they be eligible for dividend distributions during the period they are held by the company.
Expected impact on the company and the market
Domestically, this program is expected to boost employee loyalty and reduce turnover, particularly in critical leadership and technical positions. It also sends a strong message to the Saudi stock market that the company's management is confident in its future performance and share value. Regionally, this move reinforces Almarai's position as a leader in corporate governance and human resources management, potentially encouraging other companies in the region to adopt similar programs. For international investors, such initiatives enhance the stock's appeal, demonstrating a long-term strategic vision focused on sustainability and growth through investment in human capital.
