Equity’s executive pay bill rose by 48.1 per cent to Sh605 million. FILE
What you need to know:
Annual reports show KCB, Barclays and Equity executive directors’ wage bill rose by an average 25pc in 2012.
Analysts link the rise in executive pay to the sector’s increased profitability and need to retain top talent.
Kenya’s top bankers enjoyed a double-digit pay rise last year as the lenders rewarded executives they need to stay ahead of rivals.
Data from the lenders annual reports show that executive directors’ wage bill of KCB Group, Barclays and Equity increased by an average of 25 per cent in 2012 in a year the banks’ profits increased by 20.6 per cent.
StanChart was the only top bank whose executive pay remained at Sh115 million after its top chiefs’ compensation rose by 43.7 per cent in 2011.
Analysts link the rise in executive pay to the sector’s increased profitability and need to retain top talent.
“The pay for bank executives has been rising in double-digit annually in recent years and this is being driven by talent pressures,” said an executive at PricewaterhouseCoopers (PwC.).
This type of thinking is making human capital the most sought after resource in the production system for companies that seek to grow.
As a result, the top banks are keen to retain star talent and this is forcing the employers to increase fixed salaries and widen the scope of performance-related compensation to include bonuses and shares.
Equity Bank’s executive compensation bill rose 48.1 per cent to Sh605 million from Sh415 million, and was driven by a larger executive team. Equity’s executive suite has 16 managers, led by its CEO James Mwangi, up from last year’s 12.
This came as its net profit slowed to 16.9 per cent to Sh12 billion last year compared to a growth of 44.7 per cent the previous year, ranking it the second most profitable bank after KCB, whose executive-director pay grew 22.8 per cent to Sh86.7 million.
Its executive directors last year were Joshua Oigara, (then chief finance officer and now CEO), Martin Oduor-Otieno (former CEO) and David Malakwen (company secretary). Mr Oduor-Otieno left in January.
Barclays Bank executive wage bill increased 20.9 per cent to Sh104 million from Sh86 million in a year that its profit before tax increased 7.7 per cent from Sh8.11 billion to Sh8.74 billion.
The bank had three executive directors — Adan Mohamed (CEO), Yusuf Omari (CFO) and Nick Mbuvi (corporate banking director). Mr Mohamed ended his 10 year stint as CE0 in February after his promotion to the position of chief administrative officer with responsibilities for 10 countries in Africa. He is a Cabinet nominee for the Industrialisation docket.
While the banks’ top executive pay continued to rise, the lenders deepened the cut on the number of senior managers to trim payrolls and reduce reporting layers.
KCB’s pay for senior staff fell to Sh216 million last year from Sh374 million a year before while that of StanChart dropped from Sh320 million to Sh288 million. Barclays cut management pay to Sh328 million from Sh343 million.
Equity was the only top lender that had an increase in senior staff pay to Sh275 million from Sh197 million in 2011. The banks, led by KCB and Barclays, last year laid off top and middle level staff after an aggressive hiring phase started in 2007.
Cutbacks in numbers at managerial levels is a significant shift in Kenya’s banking industry, which has in the past retrenched the low cadre.
