Centum doubles payout to ninety workers after performing well

Nairobi. Investment firm Centum more than doubled the bonus payout to its 90 staff to about Sh20 billion (Ksh1 billion) in the year ended March, making it one of the largest bonus allotments in corporate Kenya translating into an average entitlement of about Sh220 million (KSh11.1 million) per employee.

The company’s bonus scheme, payable in three equal installments over three years, had accrued to Ksh431.3 million the previous year.

Centum says in its newly released annual report that the 142.6 per cent jump in bonus payment is attributable to the out-performance of pre-set annual benchmarks.

“The bonus is high because of the performance,” said Centum CEO James Mworia in an interview.

Centum’s board has set a target for the employees to raise shareholder funds or net assets by 15 per cent each year. The employees are entitled to 20 per cent of any return above the set benchmark, with the absolute payout also based on individual performance.

Centum’s net assets rose 39.1 per cent to Ksh32 billion in the review period, beating the Sh26.4 billion target based on the company’s performance criteria.

This created an excess of Ksh5.5 billion in absolute terms, of which up to Ksh1.1 billion was available for allocation to the staff.

While the average employee is entitled to about Ksh11.1 million, a breakdown of the payout shows the company’s top 10 executives will on average take home a higher pay cheque of Ksh34 million each.

The executives’ bonus pool stood at Ksh340.5 million, nearly tripling from Ksh124.7 million the year before.

The number of top Centum managers rose from the previous seven to ten as CEOs of recently consolidated subsidiaries, including Joyce Macharia (Almasi Beverages) and Titus Karanja (K-Rep Bank) joined the list.

The cash payout is not automatic and is subject to further conditions including maintaining or increasing the shareholders’ wealth each year.

“Should there be a drop in shareholder wealth, payment will not be made and will be deferred until the year when shareholder wealth is restored,” Centum says in its latest annual report. Those who leave the company before being paid their bonus automatically forfeit the sums.

The company says the scheme is meant to balance the interest of shareholders and employees, who are driven to consistently match or beat the performance benchmark going forward for their cash entitlement to vest.

“It focuses the staff on performance. Everyone at Centum works like they are running their own business,” said Mr Mworia.

The company, which has frozen dividend payments, says its chief emphasis is on maximising shareholder wealth.

It is expected that an increase in net asset value should be matched by a rising share price, boosting shareholder wealth which investors can realise by selling all or part of their shares listed on the Nairobi bourse.

Centum Investments had reported a record consolidated profit after tax of Ksh7.9 billion for the financial year ended March 31 this year.

This is up 160 per cent from Ksh3 billion in the previous period and is due to gains on disposals of investments, increase in value of property held, higher dividends from portfolio companies and higher income from subsidiaries.

Investment income increased by 142 per cent to Ksh11.8 billion from the previous year’s Ksh4.9 billion, in large part thanks to the disposal of stakes in Longhorn Publishers and UAP Holdings.

Key developments for the company in the ended financial year include:

• The purchase of a larger stake in Almasi Beverages, a leading Coca Cola bottler. Centum now owns 50.95 per cent of the bottler.

• The establishment of King Beverage Ltd, a wholly-owned subsidiary to market, sell and some-day produce alcoholic beverages. The firm has an exclusive licence to distribute Carlsberg beer.

• Winning a tender, as lead equity investor in a consortium with Gulf Energy, to build a 1.050MW coal plant in Manda Bay, Lamu County.

• Acquisition of 66 per cent of K-Rep Bank in November 2014.