Was at a quick meeting at the Lagod Polo Club with a former Bank MD when his phone rang
He had sent for diesel and when they told him how much they were able to secure it, he whistled
He then looked up at me and said – Edgar, I miss Corporate Cover.
Now what is Corporate Cover you may ask?
Corporate Cover is that benefit that accrues to an executive in an institution
It starts from the mundane to the crazy
This is where the institution covers your lifestyle in its entirety and in some cases, the benefits also covers your family
From housing, to power in the house, to maids, to yearly car change, to huge wardrobe allowances, to extensive medical cover, to international travels, to tickets to exotic international events like sports, music and even to just go and gape at UNGA
From start ups to giant quoted companies, this issue of Corporate Cover pervades
For start ups, the financial weight of Corporate Cover often stunts speedy take off and growth as the promoters would layer up with benefits which sometimes comes from working capital
This sucks up much needed Liquidity and stifles the business
For the large firms, its consequences although not very consequential can be traced more to psychological impact
Corporate Cover for a tier one Bank for example may not be up to say 5% of their usual massive Profits but where it bites them the most is the psychological effects on its top management cadre
So for a big Bank with say 10 Executive Directors who are all enmeshed in Corporate Cover, what you get is a loss of hunger on their part.
They lose focus while wallowing in the luxe of Corporate Cover
You see them at huge international events that has nothing to do with their business, see them at exclusive global private clubs where they preen like peacocks instead of networking, you see them change cars – they get two new cars annually depending on the institution and then you see them hobnob with top celebrities and from their they become lazy and fat
They can no longer push, as they see no reason to roll up their sleeves and work. Once they reach the AGM position, it’s all on autopilot for some of them.
Who suffers from these apart from the business itself?
The shareholders. The Shareholder pays for all of these expenses and luxuries cos the costs are taken upfront and factored in as part of running the business
What is left comes as dividends less all other operational costs
Do also not forget that some of these Executives would have also been gifted some of these shares or made to pay for them on some very lenient terms
So they get Corporate Cover and still get Dividends and ohhhh I almost forgot, profit Share
I am not saying it’s a bad thing or a negative; after all, what would you expect after working for the average 10-30 years it takes to reach peak position in an average institution?
The sad thing however, is when the institution is struggling or has fallen on bad times
The investor suffers cos he gets paid nothing cos no dividends would be declared, even though those managing it would still be getting their Corporate Cover amongst other entitlements
I have worked in an environment where the top managers were living like kings while the shareholders took nothing home for years due to losses
The two Managers’ one year shared N200m legitimately in different forms of lifestyle benefits written into their contracts without declaring any profits let alone dividends
I for one think that these corporate covers, while being very positive towards inspiribg a cadre of Corporate leadership should be tied to individual and corporate performance
So you can’t say cos you are ED, all 10 of you including the one that is in a cost centre must be flying a private jet with Davido or that all EDs must join the exclusive Polo Club or be flown to hang out at the French Riviera or Monaco when all he does is HR
If he wants to fete with Julia Roberts on Rodeo Drive,then he must move to a market facing position. Simple.
Basically, what I’m saying is that apart from the basic benefits of say housing, medical and the like every other thing should be job function-based and performance-driven
Furthermore, for the quoted companies, the regulators must now begin to look into this area with a view to regulating it and ensuring that it is not also adding unnecessary weight on corporate performance, especially in mid-sized to small-sized companies
For privately held companies, it’s really up to the promoter if he chooses either delayed gratification or he starts ‘chopping’ the whole thing upfront
Corporate Cover to me is a double-edged sword that could either inspire and attract the best minds, but also can be lethal if not handled wisely
I know some people will now want to come and beat me o
Duke of Shomolu
Last modified: March 14, 2026
