Uchumi recovery earns chief 38.7pc salary increase

Uchumi Supermarkets CEO Jonathan Ciano earned a pay rise of 38.75 per cent in a year that saw the retail chain end its 10-year dividend drought and witness a surge in share prices.

Details in the retailer’s notice ahead of its cross listing on the Uganda Securities Exchange (USE) show that the annual pay of the firm’s sole executive director rose from Sh19.23 million to Sh26.69 million in the year ended June.

This translates to a monthly package of Sh2.22 million, up from last year’s Sh1.6 million and Sh1.52 million in 2011 as Nairobi- bourse listed firms up their reward schemes to retain top executive talent.

The information memorandum lists Mr Ciano as the only executive on its seven-member board and remaining six directors earned annual fees of Sh3.14 million in sitting allowances.

“Apart from the chief executive officer, no other director or party related to a director has a service contract or receives compensation from the group,” said Uchumi Supermarkets in the memorandum.

“Sitting allowances to the directors are only paid subject to attendance of meetings and other board duties.”

The executive pay increase came in a year that saw Uchumi declare a dividend of Sh0.30 per share—the first since 2002 and a signal that it had completed its turnaround after temporarily closing shop in mid-2006 due to insolvency.

The pay out, which was declared last October, came as a boon to shareholders who had seen their share rise 134 per cent to Sh20 over the preceding 12 months, a surge that made it the top performer at the Nairobi Securities Exchange (NSE) in the period.

The share has remained sluggish this year having gained Sh1.75 per cent over the past six months to Sh20.25 as shareholders, mainly local, who bought the stock on the cheap cash in.

Mr Ciano has been the face of this turnaround since his appointment as receiver manager of Uchumi Supermarkets in July 2006 by KCB and PTA banks to help recover their debt of Sh956.7 million.

He led the re-opening of Uchumi stores, which had remained shut for two weeks, after its near collapse under the weight of debts that saw the retailer suspended from trading at the Nairobi bourse till mid last year.

The recovery had the support of the government, which helped create a Sh975 million rescue package.

Uchumi has since cleared the loans and opened 12 new stores since 2006.

The recovery earned Mr Ciano a fresh CEO’s contract in March 2010 and underlined his credentials as a turnaround artist, having accomplished a similar feat at Kenya Power. The retailer says that it will open 13 new stores before next June.

The chain has 25 stores across East Africa where fast-expanding economies are creating a growing middle class with disposable incomes.

Uchumi’s profit grew 20.4 per cent to Sh485.9 million in the year to June on rising sales, which stood at Sh14.2 billion up Sh13 billion a year earlier.

Mr Ciano is preparing Uchumi for a cash call that will see it offer up to 100 million shares in a rights issue that will also target investors at the Tanzania, Uganda and Rwanda bourses.

The company, which already operates stores in Uganda and Tanzania, said earlier that it planned to use cash from the rights issue for expansion in its existing markets and open stores in Rwanda and South Sudan.

Uchumi is listed on the Ugandan and Rwandan bourses.

Uchumi aims at reclaiming market share lost to rivals Tuskys, Nakumatt and Naivas, which have in recent years been on an expansion blitz.