HF Group #ticker:HFCK chief executive Frank Ireri was paid a total of Sh64.4 million in the year ended December, the mortgage financier has disclosed in its latest annual report.
Mr Ireri’s remuneration rose marginally from Sh64 million the previous year.
The company’s profit took a big hit from lower interest income on the back of reduced lending and interest rate caps.
“The remuneration of the executive director is as per negotiated employment contract. There has been no change to the non-executive directors’ remuneration, as approved by the shareholders on April 29, 2016,” HF said in the report.
“The remuneration is reviewed regularly to ensure that it is within the existing market rates. This is done to ensure that individual member (director) is effective and continue to pursue the business strategy.”
Mr Ireri’s compensation in the year ended December comprised a basic pay of Sh44.4 million or Sh3.7 million per month, gratuity (Sh13.7 million), and non-cash benefits (Sh6.1 million). The pay items were unchanged from the previous year, save for non-cash benefits that rose from Sh5.8 million.
As a ratio of net earnings, Mr Ireri’s compensation is one of the highest among publicly traded firms that have disclosed their executives’ remuneration.
At Sh64.4 million, his pay is equivalent to 51 per cent of HF’s net profit in the year ended December.
The firm’s earnings declined 86 per cent from Sh905.8 million the previous year.
HF’s interest income dropped 17.1 per cent to Sh7.1 billion as the loan book shrunk 8.8 per cent to Sh49.6 billion, with interest rate caps further reducing income from the core lending business.
The company also repaid a Sh7 billion corporate bond last year, significantly reducing its cash position.
The company says it is optimistic that removal of bottlenecks at the Land ministry will lead to completion of more property sales this year.
HF has also warned investors that provision for bad debt will likely rise with the implementation of new accounting rules that took effect on January 1.
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