i have just been reading the centum annual report and one thing i note is that the performance bonus is double the salaries of the workers. kwani bonus can be more than the annual salary. and if the price of land appreciates and is recorded as profit can u then say that u performed and u need bonus?

Yes bonus could be higher than the salaries.

If the price of land or property appreciates, both IFRS and GAAP provide the condition for valuations and revaluations and under both standards you can recognize profits, IFRS in P & L and GAAP in other comprehensive income. Accountants can explain more on these.

One thing about Managed fund is that their management have complete control of the company, they can turn into a success or a ponzi scheme. Take for instant their investment strategies- they generate most of their profit in investments in either close companies (companies that are not public traded) or illiquid real estates investments, this investment strategy give them full discrection to make wild assumptions and report profits. So if you have investments in managed funds like Centrum, look at where they make most of their profit, I haven't gone through Centrum books but I have a general knowledge of whats going on in Managed funds. But don't blame the player blame the game!

This model have been tried before, it looks good on paper but in real business world it can be destructive, it is always associated with what is called principal agency problem. The reason why you want to pay decent salary, infact ridiculously high salary, is that you want the employees to focus on longterm strategic moves, which are always less profitable in the short term, without having to worry about their end year bonuses. If you decide to pay high annual bonuses tied to performance and enough salary to get by no one will take a long term, often less profit ventures, no one will work on business development which takes years to be profitable, R & D will be unattractive.

@ Mukiha.... PERFORMANCE = PROFITS, I agree with that, thats is why there is performance bonus on top of a good salary, good salary is geared towards keeping people focused on longterm strategies and topping it with performance bonus ensures that short term tactical strategies are always in place to feed into the long term strategy and also execution of current business model is to the optimum, which as you know is also related to strategies that were build years ago.

MPs work for Government.....not for profit

Just a point to note...Buffett avoids companies which pay hefty salaries to its senior management arguing that: the interest of the management seem to lie somewhere else other than the interests of the shareholders...In short,they take care of themselves to the detriment of the real owners of the company..

Nkt! And i've been putting my little pocket money in centum hoping by the time i finish school itakuwa ka BERKSHIRE ya Buffet.

Sasa bonuses will deter you from investing? You should look at a fairly recent 'The East African' article on executive pay in listed Kenyan companies . Centum were not even a major force. Guys are being paid major cheese!

guru, which announcement?