Mutual and Federal to Reward Execs

M & F are issuing executive bonuses Despite the company's dismal performance, the execs will still receive large bonuses

As executive payouts in major corporations come under the spotlight in today's struggling global economy, the Managing Director of Mutual and Federal (M & F) insurance company confirmed that he and other executives would be receiving bonuses this year.

Mutual and Federal, the second largest short term insurance company in South Africa, has reported a dismal performance in the past year, with a headline loss of 41c a share.

The company lost nearly R150 million because of a loss in revenue from poor investments, resulting in a loss in value of its listed equities.

However, this has not stopped the company's executives from accepting bonuses, a fact confirmed by Keith Kennedy, Mutual and Federal's Managing Director.

Kennedy justified the bonuses by saying that the bonuses were not based on the investment performance of the company, but rather on underwriting. He also said that a process was underway to increase these bonuses, making it difficult to divulge exactly how much money will be paid out to company executives overall.

Kennedy, however, pointed out that all staff members had received incentive pay. "We have also given staff about 10% bonuses," he said.

Nevertheless, analysts argue that investment performance should have been taken into account when deciding on bonuses for executives. "I think he said his performance was measured on underwriting and not on investment performance because the decision made on investments does not lie with him, so he is passing the buck," said one analyst.