Best practices around the world demand that a listed company cannot have the option of skipping the requirement that they publish details of what their executives and directors are paid.
The point here is that if Kenya wants to become the regional financial and investment hub as it aspires, it must progressively conduct its affairs accordingly.
Several listed companies have seen their top officers and directors earn higher salaries at a time key measures of success are declining.
Attorney General Githu Muigai’s decision to publish new rules for disclosure of executive pay in public listed companies was long overdue.
This is an effort the capital markets regulator, the CMA, has previously tried to push through without success.
Best practices around the world demand that a listed company cannot have the option of skipping the requirement that they publish details of what their executives and directors are paid.
The point here is that if Kenya wants to become the regional financial and investment hub as it aspires, it must progressively conduct its affairs accordingly.
Not only do shareholders of listed entities have the right to know what top executives are paid, they they are also being given the right to determine what company executives and directors are paid. This in recognition of the fact that the money comes from the investor.
It would, however, be prudent for the AG to go further and have the same level of disclosure apply to directors and senior executives of parastatals or State-owned enterprises.
This is because, like public listed companies, State firms are essentially set up and funded by the taxpayer. This means their directors or executives benefit from public funds, making it imperative that they be subjected to higher levels of disclosure.
We have seen a situation where some executives have treated parastatals as their personal property, allocating themselves not only huge imprests and allowances (as well as undeserved stipends) but also contracts or tenders, some questioned in the Auditor-General’s reports. It should never be the case that shareholders or taxpayers have to tolerate fast-rising pay pay for top brass but the fortunes of the entity are headed in the opposite direction.
Several listed companies have seen their top officers and directors earn higher salaries at a time key measures of success are declining. You would expect some element of the pay, say the bonus, to be linked to the performance of the company or parastatal.
Some entities end up collapsing, hurting shareholders, staff, suppliers and creditors.
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Note: The results are not exact but very close to the actual.
