Unga Group’s CEO Nick Hutchinson took a 5.8 percent pay cut in the year ended June when the human and animal feed miller reported lower sales and earnings.
His total compensation in the review period declined to Sh44.3 million equivalent to Sh3.6 million per month compared to Sh47.1 million a year earlier (Sh3.9 million per month) as his remuneration dropped across most items.
Mr Hutchinson’s annual salary dropped five percent to Sh26.8 million while his bonus was reduced by 9.2 percent to Sh6.5 million.
His other benefits, including allowances and non-cash compensation, also dropped in the review period.
Unga has a remuneration structure that rewards its executives on a monthly, annual and medium-term basis to retain the individuals and also motivating them to achieve the set goals.
Part of Mr Hutchinson’s compensation comes from Unga’s significant shareholder and major supplier Seaboard Corporation, which charges the Nairobi Securities Exchange-listed firm management fees.
Unga purchased goods and services worth Sh3.3 billion from Seaboard in the review period, including Sh65.1 million paid to the conglomerate’s subsidiary Seaboard Overseas Management Company.
“The major objective of the remunerations policy is to ensure that there is a clear link between the executive compensation and an individual’s level of performance and their reward,” Unga said in its latest annual report.
“The group’s aim is to achieve an integrated approach to reward, linking company strategy in the form of the achievement of corporate objectives and individual performance to salary increases and bonus awards.”
Unga’s net profit dropped 30.4 percent to Sh544.8 million in the review period compared to Sh783.2 million the year before. The performance was driven by reduced sales and lower margins.
Turnover, for instance, fell 10.4 percent to Sh17.8 billion from Sh19.9 billion. The company is set to pay a dividend of Sh0.5 per share or a total of Sh37.8 million, representing a distribution of seven percent of its net earnings.