Centum #ticker:ICDC CEO James Mworia’s pay dropped by 75 percent to Sh45 million last year after he missed out on bonus earnings for failing to meet the set annual performance targets.
Mr Mworia had earned Sh177.6 million or an equivalent Sh14.7 million per month in the year to March 2018, which included a bonus of Sh132 million.
Centum’s bonus scheme is based on creation of a cash return on assets at a rate greater than that of the market, excluding revaluation of assets. The investment firm’s cash returns for the year failed to hit the minimum threshold required to trigger bonus payments for employees.
The generous bonus system is designed to act as an incentive for staff to produce at their optimum level and in turn get rewards for growing shareholder funds.
“Our bonus remuneration is linked to the cash return of the business with a hurdle rate of 15 percent. We did not achieve that in the period and we were therefore not eligible for a bonus,” said Mr Mworia in an interview.
In the year ended March 2019, Centum Group’s net profit rose by 48 percent to Sh4.12 billion, largely on the back of a Sh3.3 billion gain in fair value of property and land. Investment income on the other hand fell from Sh3.5 billion to Sh3.2 billion due to lower interest earnings and reduced dividends.
The firm has, however, made subsidiary sales this year in its beverage bottling and distribution business (Almasi Beverages Limited (ABL) and Nairobi Bottlers Limited (NBL) for Sh19.5 billion), which should reflect in subsequent financials and possibly trigger future staff bonuses.
This is the second straight year in which Mr Mworia’s salary has gone down. The Sh177.6 million pay for the year to March 2018 represented a reduction of 19 percent on the previous year’s package of Sh219.2 million.
The bonus vests over a period of three years, a structure that saw some senior managers get paid Sh56 million in bonuses accrued from previous years.
“The other senior managers’ bonus relates to accruals for previous periods that vested in the current year,” said Mr Mworia.
Total staff costs for the company during the year stood at Sh2.44 billion, compared to Sh2.12 billion in the previous period.
This included salaries at Sh1.96 billion, up from Sh1.66 billion, and bonuses at Sh185 million, up from Sh131.4 billion.
The group had 2,785 staff on its books by the end of March, up from 2,773 in March 2018.
On a comparative basis, the Centum CEO pay reduction removes him from the list of top earning CEOs in the country, where he has appeared in the top five since the executive pay breakdown started being made public in 2017.
The top earning chief executive last year was Co-operative Bank’s Gideon Muriuki, who took home a total of Sh376 million, while KCB Group’s Joshua Oigara made Sh273 million.
They attributed the bulk of their pay to performance-linked bonuses, which they earned by virtue of the growth in profits of their firms during the year.