Centum CEO takes pay cut to earn Sh177.5m

Centum Investment chief executive James Mworia was corporate Kenya’s fourth best-paid manager last year with an annual compensation of Sh177.5 million or an equivalent Sh14.7 million per month.

The Centum annual report released Monday shows Mr Mworia took a Sh41.7 million pay cut after getting a lower bonus cheque.

The pay places Mr Mworia behind three of his peers who lead the Nairobi Securities Exchange-listed firms -- telecoms operator Safaricom, KCB and Co-op Bank.

The 40-year-old Centum boss, who has for several years now executed a generous bonus scheme that rewards employees for growth in shareholder funds, saw his overall earnings dip after a cut in his perks which dislodges him from the apex as Kenya’s best paid CEO.

Sh42.4m bonus

Centum paid Mr Mworia Sh42.3 million in salaries in the period, same as a year earlier, and Sh132 million in form of a bonus.

The bonus was 24 per cent lower, compared to the previous year’s Sh173.7 million.

The bonus payment for the financial year ended March 2018 is linked to the performance of the previous year, as per the firm’s policy of paying out declared bonuses in the subsequent financial year.

“The bulk of our remuneration is a bonus, which is linked to realised gains. This means in the years which we have high realised gains you have a high bonus. In the years when the realised gains are low the bonus comes down.

"The results we will announce for the year ended March 2019 I actually have no bonus as it came to zero as we did not achieve the 15 per cent target. This is okay because my remuneration has to correlate to the performance of the company,” said Mr Mworia Monday in an interview.

Centum’s total performance bonus for its staff, including executive directors and senior managers, dropped by 19.54 per cent to Sh306.3 million from Sh380.7 million a year earlier.

Salaries for the top managers also dropped 9.03 per cent in the period to Sh203 million from Sh223.2 million a year earlier.

“The remuneration of executive directors is determined based on remuneration benchmarks in the industry, prevailing market conditions as well as the company’s performance and profitability,” says Centum in the report.

“In the financial year ended March 31, 2018, the performance hurdle rate… was not met and accordingly, no bonus pool has been accrued in relation to the year then ended.”

Hefty bonus

Mr Mworia had previously enjoyed a hefty performance bonus, which coincided with Centum’s aggressive expansion into big-ticket projects.

Centum recorded a drop in its full-year net profits to Sh2.7 billion from Sh8.2 billion in 2017, mainly due to lower property valuation gains and a tough business environment in 2017.

“The impact of the economic headwinds is reflected in our performance for the year ended March 31, 2018, specifically in relation to completion of exit transactions and value uplift in our real estate portfolio,” says Mr Mworia in the annual report.

“In the financial year ended, we had developed a pipeline of exit transactions in both our growth and real estate portfolios. In view of the investment climate then prevailing, we were only able to complete the exit of our investment in Platcorp Holdings Limited.”

The company had in May said its earnings would also be affected by the fact that it had not realised gains on the disposal of one of its businesses, GenAfrica Asset Managers, whose sale was not finalised by March 31. Those gains will reflect in the financial year to end of March 2019, the firm said.

Centum’s total staff count jumped 31.34 per cent to 176 during the year from 134 a year earlier spread across 12 wholly owned subsidiaries with an average age of 32. The Centum stock stood at Sh34 per share by close of Monday, remaining unchanged from Friday’s closing price.

With an annual pay of Sh196.5 million, Safaricom #ticker:SCOM chief executive officer Bob Collymore is the third highest-paid corporate executive in Kenya -- after Co-op Bank’s Gideon Muriuki and KCB’s Joshua Oigara.

Mr Muriuki took home Sh370 million in the year ended December 2017 with Mr Oigara coming in second with a total package of Sh256 million, consisting of Sh65 million in basic salary and allowances and the remainder in form of a bonus.

Equity Bank #ticker:EQTY paid its chief executive, James Mwangi, Sh60.4 million last year —Sh56.74 million in salary and Sh3.7 million in allowances.

The lender earlier said it did not pay the CEO any bonus.

List of firms

The list of firms that paid their chief executives more than Sh100 million last year includes oil marketer KenolKobil, ARM Cement and Standard Chartered Bank.

KenolKobil paid its CEO, David Ohana, Sh151.1 million in 2017, consisting of Sh52.9 million in salary, a bonus of Sh84.7 million and other payments for undisclosed items amounting to Sh13.4 million.

Mr Ohana was also offered the option of acquiring shares worth more than Sh1.5 billion over the next six years. The firm’s annual profit stood at Sh2.4 billion.

Stanchart, #ticker:SCBK whose net earnings fell 23.5 per cent to Sh6.9 billion in the year ended December 2017, paid its chief executive, Lamin Manjang, a total of Sh104 million during the year, having raised his pay by Sh3 million.

Cement maker ARM paid its chief executive, Pradeep Paunrana, Sh114.7 million, despite closing the year with a massive Sh6.5 billion loss.