From left, KCB's Joshua Oigara, Barclays Banks's Jeremy Awori and EABL's Charles Ireland. Executive pay for the top 10 companies listed at the NSE rose 20.5 per cent in the past financial year. PHOTOS | FILE |
What you need to know:
The latest regulatory filings show that besides the annual review of pay perks, the steep rise in compensation was linked to the expansion of executive teams as more firms hired top professionals to gain a competitive edge over their rivals.
Executive pay for the top 10 companies listed at the Nairobi Securities Exchange (NSE) rose 20.5 per cent to Sh1.6 billion in the past financial year, nearly matching the 21 per cent rise in their total profits in the same year, according to the latest regulatory filings.
The filings show that besides the annual review of pay perks, the steep rise in compensation was linked to the expansion of executive teams as more firms hired top professionals to gain a competitive edge over their rivals.
The improved compensation saw Kenya’s high profile executives like James Mwangi (Equity), Joshua Oigara (KCB), Jeremy Awori (Barclays), and Lamin Manjang (StanChart) pocket an average of 1.4 per cent of their companies’ total net earnings.
KCB reported the fastest growth in executive directors’ pay of 62.9 per cent to Sh155.5 million in the year ended December 2014, compared to Sh95.4 million the year before.
The beneficiaries were Mr Oigara and KCB executive directors Charles Langat and Joseph Kania.
KCB, which is Kenya’s largest bank by assets, rewarded the executives for their contribution to the 17.7 per cent jump in the bank’s net profit to Sh16.8 billion.
I&M Holdings, another lender, was second with a 62.8 per cent increase in executive remuneration to Sh38.6 million in the year ended December, up from Sh23.7 million a year earlier.
The bank’s chief executive, Arun Mathur, and executive director Sarit Shah were the beneficiaries of the pay increase that came in the wake of a 15.2 per cent net profit growth to Sh5.7 billion.
Safaricom, the country’s most profitable firm, whose top executives’ pay stood at Sh211.7 million for the year ended March 2014 is yet to release its annual report for the financial year ended March 2015 when its net profit rose 38.4 per cent to Sh31.8 billion.
Equity, whose executive directors earned 33.7 per cent more or Sh440 million, was fourth, maintaining its position as the firm that paid the most in absolute terms among the top 10 publicly traded companies.
The bank also has a relatively larger executive team, which recently expanded in line with its aggressive Pan-African growth strategy that saw the Kenyan lender strike a deal late last month to acquire a 79 per cent stake in ProCredit Bank Congo for Sh5.8 billion.
Equity has 10 executive directors, including Mr Mwangi, chief finance officer John Staley, and the managing director of its foundation, Hellen Gichohi.
The big jump in the bank’s executive pay came as the bank’s net profit rose 29.1 per cent to Sh17.1 billion for the year ended December 2014, making it the country’s most profitable lender.
Mr Mwangi said Equity’s burden of executive compensation is expected to fall in the coming years as it extends its operations to 15 countries in Africa in 10 years.
At StanChart, the top tier lender with foreign roots, compensation of the bank’s three executive directors Mr Manjang, Chemutai Murgor (head of finance) and Robin Bairstow (head of origination) rose 18 per cent to Sh154.2 million in the year ended December 2014. The margin of pay increase was higher than the 12.6 per cent increase in its net profit to Sh10.4 billion in the same period.
The region’s biggest brewer, East African Breweries Limited, rewarded its executive directors Charles Ireland (CEO) and Tracey Barnes with a 15.1 per cent pay rise to Sh247.4 million in the year ended June 2014 when the company reported a 5.1 per cent increase in net profit to Sh6.8 billion.
DTB paid its executive directors, including CEO Nassim Devji, Sh79.8 million in the year ended December 2014, 6.6 per cent more than the previous year. The banking group’s net profit rose 9.1 per cent to Sh5.7 billion in the same period.
Barclays, Bamburi and CFC stood out as the NSE-listed firms that cut their executive pay – an outcome that was mainly associated with a drop in the number of top executives.
Barclays, which paid its chief executive Mr Awori and chief financial officer Yusuf Omari Sh95 million in the year ended December 2014, had the biggest drop in executive pay of 20.8 per cent compared to the previous year even as its net profit rose 10 per cent to Sh8.3 billion.
Cement maker Bamburi reduced the pay of its three executives, including CEO Bruno Pescheux, by 4.6 per cent to Sh103 million in the year ended December 2014 compared to Sh108 million the year before despite a rise in the company’s net profit by 6.2 per cent to Sh3.9 billion.
CFC cut its executive directors’ pay (comprising Kitili Mbathi and Greg Brackenridge) by 1.3 per cent to Sh80.5 million in the year ended December 2014 when the company’s net profit increased 10.9 per cent to Sh5.6 billion.
The pay rise seen across the board is in line with a long-term trend in corporate Kenya where compensation schemes, including salaries, stock options, and allowances have continued to grow to attract and retain top talent in a competitive business landscape.
Talent surveys conducted by advisory firm PricewaterhouseCoopers (PwC) have consistently reported acute scarcity of top talent in the local and regional markets, which has become the key driver of the bigger pay cheques awarded to experienced executives.
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