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SPECIAL INVESTIGATION: Cornerstone Insurance: 5 Years of Dividend Drought, 1,000% Hike in Directors’ Pay

Cornerstone Insurance caricature

BEVERLY HILLS, June 06, (THEWILL) – Shareholders of Cornerstone Insurance Plc will assemble for the company’s 29th Annual General Meeting (AGM) later in the year to listen to the chairman’s statement and transact other statutory businesses. However, they will be paid no dividend.  Details gleaned from the firm’s unaudited 2020 financial statement submitted to the NGX Exchange (formerly Nigerian Stock Exchange) showed that the directors have proposed no dividend for 2020. And this will be the firm’s fifth consecutive year of dividend drought. It paid dividends last in 2015 and that was 2 kobo per N50 share.

The insurance sector was not spared the bruises of COVID-19. It also suffered the effects of a 15-month land border closure, which, combined with recession, put business ventures on the edge. Expectedly, 2020 was not a pleasant year for Cornerstone Insurance. The firm recorded Profit After Tax (PAT) of N1.6 billion as against N4.10 billion in the corresponding period of 2019 – a decline of N2.51 billion or 61.4 percent.  The 2020 post-tax profit was also the least since 2016 (see table)

A curious twist in the narrative is that while the shareholders will receive virtual handshake, the eight directors of the firm will be laughing to their banks. An examination of the financial statement revealed that the firm jerked up its directors’ emolument from N68.254 million in 2019 to N932.369 million in 2020. This represents an increase of N864.115 million or 1,266 percent.  The paradox also exists in the fact that the directors’ bumper harvest occurred in a lean season for the firm and the investors.

Jerking up directors’ remunerations in a year that businesses suffered COVID-19-induced challenging environment that knocked life out of some firms and many walked a tight rope to survive, is puzzling. Furthermore, the eight directors of the firm are Nigerians. The spike in their remuneration cannot be attributed to forex differentials as would be the case with firms that have expatriate directors.

It is also the highest emolument drawn by the directors during the five-year survey period. The almost.