NSE firms disclose CEOs’ pay in transparency drive

ceo pay

Seven listed companies have published details of what their CEOs were paid last year. FILE PHOTOS | NMG

Seven listed companies have published details of what their CEOs were paid last year, opening a new frontier of transparency that their peers continue to resist despite the push by regulators.

Sanlam Kenya #ticker:PAFR , Nairobi Securities Exchange (NSE) #ticker:NSE , Deacons East Africa #ticker:DCON , KenolKobil #ticker:KENO , KenGen #ticker:KEGN and Kenya Re #ticker:KNRE make the list of companies that lead the executive pay transparency drive — having announced a mix of flat and higher pay for their chief executives in 2016.

Sameer Africa went the furthest to disclose the emoluments of each board member, including that of its chief executive, Allan Walmsley, becoming the first publicly traded company to do so in the absence of a legal requirement.

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The Capital Markets Authority (CMA) had in 2014 proposed regulations compelling listed firms to publish details of executive pay but later discarded the proposals after intense lobbying by CEOs.  

KenolKobil’s David Ohana was the best paid chief executive among the seven, having earned Sh6.6 million per month in the year ended December 2016 after his compensation rose 6.8 per cent from Sh6.1 per month a year earlier.

The oil marketer’s net profit rose 20 per cent to Sh2.4 billion in the period, benefiting from Mr Ohana’s decision to sell non-performing assets, reduce debt and focus on high-margin segments of the petroleum market.

Sanlam’s Mugo Kibati was second with a package of Sh3.3 million per month, having risen 18.1 per cent from Sh2.8 million in 2015 when he replaced Tom Gitogo.

Sanlam’s net profit jumped 2.5 times to Sh70.6 million, helped by a change in valuation guidelines that depressed some of its liabilities.

Mr Kibati is currently battling increased competition in Sanlam’s stronghold of life business while also seeking to grow the company’s market share in general insurance, a segment it exited in 2011 only to re-enter by acquiring Gateway Insurance in 2015.

Mr Walmsley of Sameer, whose pay stayed stable at Sh2.1 million per month, was the third highest-paid in a year the company’s net loss widened to Sh652.1 million.

The deeper loss was the product of Sameer’s decision to shut down its tyre making plant to become a distributor. The decision forced Sameer to draw down its cash reserves to pay sacked factory workers and write off inventory as part of the Sh877 million one-off costs.

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Sameer also disclosed that non-executive board members were awarded marginal increases in fees and sitting allowances.

Erastus Mwongera, the company’s chairman, was, for instance, paid Sh233,333 per month or Sh2.8 million in the year.

Sameer Merali, the son of the company’s majority shareholder Naushad Merali, was paid Sh45,000 per month or Sh540,000 for the year.

KenGen says in its disclosure that outgoing CEO Albert Mugo earned Sh1.9 million in the year ended June 2016, having been awarded an 8.1 per cent pay rise from the Sh1.7 million the previous year.

The power producer also pays all its directors, including Treasury secretary Henry Rotich, an annual fee of Sh600,000 besides additional allowances whose details are not known.

Deacons’ Muchiri Wahome was paid Sh1.8 million in the year ended December, having received a 12.1 per cent pay rise from Sh1.6 million the year before. Higher expenses saw the fashion retailer slip into a Sh276.3 million net loss in the period from a net profit of Sh113.7 million the year before.

NSE’s Geoffrey Odundo’s pay rose to Sh1.5 million a month in the same period even as the company’s net earnings dropped 40 per cent to Sh184 million.

Kenya Re’s Jadiah Mwarania got the highest pay rise of 26.1 per cent in the year ended December, lifting his compensation to a monthly average of Sh1.2 million. The reinsurer’s net earnings dropped 7.5 per cent to Sh3.2 billion, driven by a Sh665 million provision for doubtful debt.

Kenya Re, however, remains one of the most profitable among local insurers and has the lowest earnings volatility thanks to its diverse asset base that includes investments in real estate.

Kenya has lagged behind more developed capital markets in pay disclosure, which is seen as an important part of corporate governance, giving all shareholders an opportunity to measure executives’ performance against their compensation.

Safaricom’s #ticker:SCOM Bob Collymore and KCB’s #ticker:KCB Joshua Oigara in December 2015 made personal decisions to announce their remuneration but their companies have not adopted pay disclosure policies since then.

Mr Collymore’s average monthly compensation was Sh9 million while that of Mr Oigara was Sh4.9 million, the CEOs announced at the time.

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