bne IntelliNews – NEO: the Russian Melon Fashion Group transforms a quarter of its employees into shareholders
Leading Russian fashion retailer Melon Fashion Group will grant shareholder status to nearly a quarter of its employees under a long-term incentive program, according to a company statement.
To mark the launch of the program, Melon Fashion co-founder and chairman of the board, David Kellermann, will transfer a portion of his existing shares in the company to employees who have been with the company for two years or more. The shares will be allocated to с. 1,400 employees of all professional ranks, cities and countries of residence.
Melon Fashion had over 5,000 employees at the end of last year. Kellermann has a 40% stake in the company, while other owners include Swedish property company Eastnine, Swedish fund East Capital and CEO Mikhail Urzhumtsev, according to company information.
“Our company is much more and much more than just a company: we are a community, united by a common philosophy, loyalty to the company, its values and passion for what we do,” Kellermann said. “The decision to share part of my participation with the employees of the company is my way of expressing my gratitude to all team members, regardless of their position. I believe this partnership will build positive momentum for our continued success in the years to come.
The announcement marks a major milestone for a Russian private company, potentially making Melon Fashion the only domestic commercial player with so many employee shareholders at all levels of operation. This also follows recent reports that the company may be considering an IPO.
There are precedents for employee ownership in the Russian market. Online recruiting service HeadHunter – listed on NASDAQ and MOEX – launched a share buyback program in 2021 to fund one of the largest employee incentive programs in Russia’s IT sector.
The company plans to distribute 6% of the company’s shares to 50% of employees over a four-year period, according to Russian Forbes. The program will mainly target middle managers out of a total workforce of approximately 1,000 people.
In addition, the French online carpooling platform BlaBlaCar has adopted a new shareholding policy which gives 100% of employees the possibility of becoming shareholders from the summer of 2021. As part of this policy, all members of who were not yet shareholders have become shareholders, while all new employees will be. obtain free shares with a vesting period of two years.
BlaBlaCar, which also operates in Russia, said about a third of its team of nearly 800 people held shares so far.
Melon Fashion’s approach is distinguished by its uniqueness in the Russian retail segment, as well as the decision to distribute shares by an existing owner. The company points out that the majority of new shareholders will come from its store employees and customer service representatives.
Based in St. Petersburg, Melon Fashion is a major player in the Russian fast fashion industry. It operates four brands, mainly specializing in women’s clothing – Zarina, befree, Love Republic and sela – which are top sellers on national e-commerce platforms. The company launched international sales on Amazon late last year.
The company recorded a 66% growth in revenue in the first nine months of 2021 to 28.3 billion rubles, while the share of online sales increased from 7% in 2017 to 34% in 2020. Melon Fashion operates 845 stores in Russia and the CIS.
Kellermann is a Swedish businessman with a long history of investing in Russia. He founded Melon Fashion with two Russian partners in the 1990s, after transforming a Soviet industrial tailoring factory built on the grounds of a tailoring school that dates back to 1882.
This article first appeared in New Economy Observer (NEO), a digital publication covering the intersection between finance and social responsibility, with a particular focus on emerging markets. It offers information and analysis on key issues shaping the new global economy, including climate change and renewable energy, sustainable development, e-commerce and technological innovation, and the future of work.