The Capital Markets Authority (CMA) has admitted that it did not fully disclose details of how independent directors earned large sums in sitting allowances for the year ended June 2017, putting to question the state of corporate governance in an agency whose mandate is to protect investor interests in public listed companies.
The CMA said in response to media queries that it had not disclosed in its annual report the fact that its board members were also paid a sitting allowance for attending functions outside the boardroom, raising questions as to what really makes a board sitting in a corporate environment.
The state of corporate governance at the CMA has recently come under scrutiny after the agency reported that some of its directors attended 50 meetings that qualified for payment of allowances in a year – meaning making an average of one meeting every week.
CMA directors are legally allowed to earn a sitting allowance of Sh20,000 for every meeting attended besides a monthly retainer of Sh70,000.
The authority’s annual report had indicated that independent board members pocketed more than Sh1 million after attending a specified number of full board and board committee meetings, raising questions as to how the allowances are computed.
It was only after questions were raised that CMA clarified that the directors are also paid for attending other official functions of the authority outside the boardroom.
“In addition to being paid sitting allowance for attending board meetings and board committee meetings as disclosed in the 2016/17 annual report, board members are also paid sitting allowances for attending other official board engagements such as official functions of the authority, board retreats, stakeholder engagement and sensitisation sessions, which in line with State Corporations Advisory Committee and Public Sector Guidelines all constitute official board business,” the CMA said.
Three independent board members — Paul Ngugi, Christine Okoth and Harry Kimutai — earned in excess of Sh1 million in sitting allowances for the year, suggesting that they attended more than 50 official engagements that qualified for payment of allowances.
Mr Ngugi also had the distinction of attending the highest number of board and committee meetings (36).
The CMA’s report is the clearest revelation of the handsome perks that directors of State agencies and corporations enjoy -- taking-home six-figure pay every month.
The CMA’s 2017 annual report shows that the highest earning independent director, Ms Christine Okoth, took home Sh2.07 million out of which Sh1.06 million was in sitting allowances and Sh912,258 in retainer allowances.
The report shows that Ms Okoth attended a total of 33 board and board committee meetings that earned her Sh660,000 in sitting allowances.
That means she earned additional Sh500,000 in sitting allowance for attending official functions outside the boardroom.
The regulator’s other independent directors are the chairman James Ndegwa, Linda Muriuki, George Mose Moibi and Thomas Kibua.
In total, the independent directors earned Sh6.28 million in sitting allowances for the year, having attended between 22 and 36 board and board committee meetings.