Of course it is the norm, it is their stated policy. That's my point.

Very true

What is the 'Agency Theory'
The agency theory is a supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving problems that can exist in agency relationships; that is, between principals (such as shareholders) and agents of the principals (for example, company executives). The two problems that agency theory addresses are:
1.) the problems that arise when the desires or goals of the principal and agent are in conflict, and the principal is unable to verify (because it difficult and/or expensive to do so) what the agent is actually doing; and
2.) the problems that arise when the principal and agent have different attitudes towards risk. Because of different risk tolerances, the principal and agent may each be inclined to take different actions.



Read more: Here

I agree completely. All salaries, bonuses, etc. are, by definition, "at the expense" of owners. There is always a balance to be struck between who gets what. I think this balance is working, which is why I am an owner. For those of you who are not, Centum's share price has always tracked NAV closely. It is now trading at around 20% less than NAV per share. This is a no-brainer investment.

How much has management given to shareholders? Hio ndio shida.

To consider dividend as the only source of return is narrow thinking...


Also From management's point of view... Would I rather pay bonus to retain a key return generating staff member or pay dividends to retain a cry baby Wanjiku shareholder... Its a no brainer

The wealth is there it is just currently undervalued. Since you asked for a simple explanation, I will give one: market value and book value are not the same thing. Sometimes there is a pricing mismatch, as there is today. Centum’s NAV is a conservative estimate of the intrinsic value of the company and the share price is way below this level. This is the textbook definition of an undervalued company and, therefore, a fantastic buying opportunity. If everyone recognized the value of the company, and the price reflected it, it would not be. If you bought when the company was overvalued or even fairly valued, then life is hard right now. But only if you want/need to sell. If you hang on to the stock or, preferably, buy into it more, you will do very, very well.

Personally, I would rather have seen a share buyback than a dividend. If the company's board and management think the company is undervalued, as I am sure they do, they should have proposed a Shs 600m share buyback. I would have held mine, realising a paper gain. You would, presumably, have sold yours, realising a real gain. And we both would have been happier.

You could be creating wealth for share holders while unfairly stealing from them. Are they employees or fund managers?
Centum employees are paid salaries which i can assure are no peanuts and are in tandem with their contributions to the groups growth. I do agree on bonus payment for excellent results but their style of bonus pay is outright thuggery. The bonuses should be a fixed amount or a percentage of their salaries.
Awarding bonuses as a percentage of a company's profit can lead to enormous bonus figures and is simply doubling as an employee and a fund manager who are paid management fee based on portfolio returns.
Its unfair that bonuses to employees exceeds dividends to all shareholders.
As much as the employees credit themselves for the good performance, credit should also go to shareholders for providing the capital.
I see these employees becoming bigger than the company one day.

To date they have been very similar to fund managers so a fund manager-like bonus system makes sense. A fixed amount bonus does not, it creates no incentive for maximum performance 'just good enough to get the bonus' performance. The hurdle rate model works globally and it looks like it is working at Centum. As the company shifts its focus to more of a conglomerate style group, the bonus system will probably need to be rethought.

As for the shareholder credit for providing capital, see my post on the NAV per share relative to market price. The reward will come.

Is it not the current employees who enable Centum to exit its investments at a gain?

Both ROA and ROE are good for centum.