Ericsson wrote:http://www.businessdailyafrica.com/corporate/companies/Inside-Centum-s-unique-bonus-payment-scheme/4003102-4117020-13h4bsj/index.html
Interesting. So the bonuses are based on cash returns and not revaluations...Or is it an interview for bad publicity repair in view of recent headline about Mworia's pay..
Quote: The bonus is based on growth of net asset value (NAV); right?
No, it is based on cash returns.
So, it was changed because previous annual reports said it is based on growing NAV above 15 per percent.
Since we came up with the policy in 2009, it has not had a lot of modifications. The bonus policy takes into account market-based movements.
So, even if we have a revaluation of assets, it does not go into the calculation. You must have a market-based transaction, meaning either realised gains, dividends or where the company has had a market transaction, meaning the value is based on a realised price. The hurdle rate is 15 per cent and whatever is above that is what goes into the bonus pool. The annual report is abridged and does not go into details of how the bonus is calculated.
We shall soon publish a detailed version of the bonus policy for transparency. The calculation of the bonus — and this is where the detailed bonus computation comes — is really based on cash returns to the company and not on the book value. If it was based on book value, it would have been on a different multiple. So, we don’t take into account revaluation movements. In the total return statement, revaluation movements are included.
So, for example, if you buy land and get development plan approval and the valuation changes, those valuation movements are factored in the total return. For purposes of calculating the bonus, all those revaluations are removed. The only thing you are left with is the cash return.
Time is money, so money is time. Money saved is time gained in reverse! Money stores your life’s energy. You expend your energy, get paid money, and store that money for a future purchase made in a currency.