Centum Investment chief executive James Mworia is corporate Kenya’s best paid manager with an annual compensation of Sh201.1 million or Sh16.7 million per month, according to the latest financial reports.
The pay, which incorporates a performance bonus, places Mr Mworia ahead of his peers, who lead Kenya’s five largest companies by market capitalisation at the Nairobi Securities Exchange, including telecoms operator Safaricom and East African Breweries Limited (EABL).
Mr Mworia’s compensation is disclosed in Centum’s latest annual report, which covers the year ended March.
The 39-year-old corporate executive has mainly benefited from his company’s generous bonus scheme that rewards employees for growth in shareholder funds.
The performance bonus, which has coincided with Centum’s aggressive expansion into big-ticket projects, has inflated the investment firm’s executive pay by large margins – placing them ahead of their peers.
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Safaricom’s CEO Bob Collymore and former chief financial officer John Tombleson took home an average monthly pay of Sh10.7 million in the year ended March, ranking third in the list of top earners.
Mr Collymore in December last year disclosed that he earned about Sh8.9 million per month in employment income in the preceding 12 months.
EABL’s Jane Karuku (MD of Kenya Breweries Limited) and the firm’s two former executives – Charles Ireland (former CEO) and Tracey Barnes (former CFO) — shared an average monthly pay of Sh7.2 million in the year ended June 2015 while KCB Group’s Joshua Oigara and his chief financial officer, Lawrence Kimathi, took home an average monthly compensation of Sh6.3 million each in the year ended December 2015.
The two executive directors at BAT Kenya – chief executive Keith Gretton and CFO Philip Lopokoiyit — are next in the pecking order with average monthly compensation of Sh5.3 million each in the year ended December.
Mr Mworia’s pay rose by a quarter from the previous Sh160.5 million or Sh13.3 million per month, trailing only that of the Equity executives whose compensation increased 30 per cent.
Remuneration of EABL and BAT executives rose five per cent and 7.5 per cent respectively while those of Safaricom and KCB executives declined four and two per cent respectively, partly due to executive changes.
Mr Mworia’s pay increase matched the 25 per cent jump in Centum’s net profit to Sh9.9 billion in the year ended March.
Compensation of Safaricom, KCB, EABL and BAT executives, however, significantly trailed the companies’ net earnings which grew by 20, 16, 39, and 17 per cent to Sh38.1 billion, Sh19.6 billion, Sh9.5 billion and Sh4.9 billion respectively.
The performance of CEOs and their executive teams is often linked to their profitability, which in turn influences dividend payouts and share price movements.
The focus at Centum is on growing shareholder funds or the company’s net asset value, a metric in which Mr Mworia and his team have delivered and earned handsome rewards in the past few years.
Centum’s board has set a target for the employees to raise the book value by 15 per cent each year.
The employees are entitled to 20 per cent of any return above the set benchmark, with the absolute payout also based on individual performance.
Centum’s net assets rose 23 per cent to Sh39.3 billion in the year ended March, beating the target of Sh36.7 billion based on the company’s performance criteria.
This created an excess of Sh2.5 billion in absolute terms, making Sh516.8 million available for allocation to eligible staff.
“The group’s performance bonus scheme is designed to enable achievement of consistent business growth that is tied to the increase in shareholder wealth, which is the primary business objective,” Centum said in the report.
The bonus is payable in three equal instalments over three years, with accrued payouts continuing only if the net asset value is maintained or increased from the prior year.
Under Mr Mworia’s tenure, Centum has increasingly shifted its investments to large scale projects that have generated massive realised and unrealised gains.
This has added billions of shillings to the book value of Centum – which avoided paying dividends for years — even as it allowed the executives to pocket millions of shillings in bonuses.
The company in the year ended March, for instance, booked a Sh5.1 billion gain in its property investments led by the Two Rivers Mall, which it says now has an implied value of Sh23 billion based on the price paid by new equity investors in the shopping complex.
When Mr Mworia was appointed Centum’s chief executive in October 2008, the company was largely a passive investor in listed and private companies, including General Motors East Africa, ARM Cement, and Coca-Cola bottlers.
The company now intends to have a presence in all the major sectors of the economy through companies in which it has sole or joint control with other institutional investors.
The strategic shift has seen it sell its holdings in some associate companies and raise its stake to controlling levels in others such as Sidian Bank, formerly K-Rep Bank.