As Crikey reported on Monday, Centro executives would be acutely feeling the pain of the listed property trust’s rapid and stunning fall from grace. As Centro stapled securities continue to slump yesterday, the value of executives’ share holdings in the entity slid further into negative territory.

Centro executives were extended non-recourse, 10-year, interest free loans which allowed them to purchase Centro securities. Most executives and many lower-level Centro staffers took up the offer and were sitting on handsome paper profits when Centro shares hit $10.07 in March this year. Of course, with Centro stapled securities opening this morning at 95 cents, the outlook isn’t so pretty.

Centro’s annual report notes that “participating employees cannot sell or otherwise deal with the securities unless the loan is full repaid”. That means the minimal equity that executives have left would be usurped by the non-recourse loan owing. Therefore, Andrew Scott won’t be able to access his $4.7 million in Centro equity without paying off his $10.5 million loan first.

Below is a table of Centro executives’ current holdings and the associated loans:

Holding Price Value Loan Owing to Centro
A Scott 4950000 0.95 $4,702,500 $10,479,538 $5,777,038
G Terry 2850000 0.95 $2,707,500 $6,427,421 $3,719,921
R Nenna 1940000 0.95 $1,843,000 $4,890,523 $3,047,523
J Hutchinson 2040000 0.95 $1,938,000 $5,381,621 $3,443,621
T Thorney 140000 0.95 $133,00 $5,106,263 $4,973,263
M Wilson 1440000 0.95 $1,368,000 $6,799,754 $5,431,754
P Kelly 900000 0.95 $855,000 $4,981,189 $4,126,189

In total, Centro executives owe the company more than $30 million, with the biggest debtors being CEO Andrew Scott and chief investment officer, Mark Wilson who owe $5.7 million and $5.4 million respectively.

Sadly for Centro shareholders, the loans are non-recourse, so the company wouldn’t be able to personally sue the executives for the debt owed. The company can of course seize the collateral, being the Centro shares themselves, but that doesn’t even come close to covering the debt.

The AFR reported today that Andrew Scott told investors that he accepted full responsibility for Centro’s woes – no word yet though as to whether Scott will be returning the $1.5 million cash short-term incentive which he was paid by Centro this year.