Oil marketer enters Kenya's corporate history after making the largest single payout to an executive amounting to $7.1m

Mr Segman, resigned in 2013, three months after announcing a record net loss of Sh6.2 billion for the year ended December 2012.
At Sh707.1 million, the settlement is also equivalent to redeeming about 40.2 million shares.

Oil marketer, KenolKobil has entered the Kenyan corporate history after it made the largest single payout to an executive running into hundreds of millions of shillings.

The Nairobi Securities Exchange-listed firm paid its former chief executive, Jacob Segman, Sh707.1 million ($7.071m) to settle a long-running dispute over his stock-based compensation.

KenolKobil disclosed Mr Segman’s final compensation in its latest annual report that has been published in line with the new reporting regulations requiring detailed account of money paid to individual directors.

“A legal dispute arose on validity of the Esop [employee share ownership plan] options, with legal proceedings commencing in courts of law in Kenya and in the State of Delaware, USA. In December 2017, the company settled the matter out of court, making payment to Mr Segman possible,” the report says.

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The settlement is enough to pay his successor, David Ohana, for another 13 years based on his annual salary of Sh52.9 million ($529,000) or Sh4.4 million ($44,000) a month in the year ended December 2017.

At Sh707.1 million, the settlement is also equivalent to redeeming about 40.2 million shares or 2.7 per cent of the company’s 1.4 billion issued shares based on the current market price of Sh17.6.

KenolKobil’s other reports had previously suggested that the former executive walked away with sums ranging between Sh300 million ($3m) and Sh480 million ($4.8m).

Mr Segman, a former group managing director resigned in 2013, three months after announcing a record net loss of Sh6.2 billion ($62m) for the year ended December 2012.

He had served in the position for 23 years.

The oil marketer had structured currency hedges which turned against it to the tune of Sh4.6 billion, contributing to the massive loss.

The cash settlement took a big bite out of KenolKobil’s earnings in the year ended December 2017 when the company’s net profit stood at Sh2.46 billion ($24.6m), a two per cent rise from Sh2.41 billion ($24.1m) the year before.