KCB boss four-year salary crosses Sh1bn

KCB Group #ticker:KCB Chief Executive Officer Joshua Oigara has earned Sh1.05 billion in the last four years, benefitting from the performance-based pay that has cemented his position as Kenya’s most rewarded executive.

Regulatory filings by KCB, which is Kenya’s biggest bank by assets and most profitable lender, show that Mr Oigara has earned 63 percent of this money in form of performance-related bonuses, equivalent to Sh667.6 million between 2016 and 2019.

KCB has been disclosing executives’ pay, including salaries, stock options and bonuses, in its annual report since July 2017 in line with the legal change that made it mandatory for listed companies to make directors’ pay public .

Mr Oigara, 45, whose renewable term of five years ends in 2023, earned Sh262 million in basic salary over the four years with the annual pay rising from Sh57 million in 2016 to Sh72 million last year, reflecting a 26.3 percent growth.

His allowances, such as house, car and telephone perks, over the four years totalled Sh60.5 million or Sh1.26 million per month, which is at par with the pay of a CEO serving a State owned firm like Kenya Power.

Mr Oigara was also paid Sh59.6 million in gratuity, and Sh2.3 million in non-cash benefits, which include medical insurance cover, club membership and professional indemnity cover.

“The KCB Group approach towards reward and recognition is to ensure that individuals are adequately compensated and recognised for their role towards the overall success of the groups’ business,” said the lender in its annual report for 2019.

“Executive directors’ performance is measured on the basis of a balanced scorecard... covering areas around financial performance, customer and stakeholder satisfaction human capital, culture, learning and growth and efficiency in internal business processes.”

The lender reckons that its management pay is also based on the market average obtained through a regional survey of executive compensation all the way to bonuses that are linked to a range of metrics such as return on equity. KCB, which also operates in neighbouring Uganda, Tanzania, Rwanda, Burundi and South Sudan, has returned double-digit profit growth for most of years since it hired Mr Oigara as CEO in 2013. The bank’s net profits rose 4.8 percent last year to Sh25.1 billion from Sh23.99 billion the previous year, and has risen from Sh19.7 billion in 2016.

This has translated to outsized compensation for Mr Oigara who has cemented his position among the highest-paid executives in the region.

The bank’s shareholders are also happy. In the past four years, KCB has paid a collective dividend of Sh40.2 billion, accounting for 45.4 percent of its total earnings over the period.

At the Nairobi Securities Exchange (NSE), shareholders have seen the worth of their holding jump by Sh90.2 billion in the four years to December, more than doubling its capitalisation from Sh83.1 billion in 2016 to Sh173.3 billion at the end of last year.

Kenya in December 2015 changed the company law that requires public listed companies to publish an exhaustive account of directors’ benefits, including that of chief executive officers.

This was meant to offer deeper insights into executive pay and improve accountability as investors get a better feel of how directors are rewarded against their performance.

The previous Act limited directors’ benefits disclosures to salaries, pensions and fees for serving on the boards of directors and retrenchment compensation. This allowed companies to aggregate directors’ compensation under the reporting lines, offering little insight into how the top executives were remunerated.

Mr Oigara’s compensation last year increased 9.6 percent to Sh299.1 million from Sh272.9 in 2018, making the bank the first NSE firm to disclose executive pay. This translates to an average pay of Sh24.93 million per month, which is 95.3 times the average monthly pay of Sh261,461 for a KCB employee.

His basic salary of Sh72 million went up 5.9 percent from Sh68 million in 2018 and was also paid deferred compensation of Sh48.4 million as bonus last year and a gratuity of Sh21.6 million.

During the period, he earned a bonus of Sh145.3 million, which dropped 19.2 percent from the Sh179.9 million bonus he was paid in 2018. Mr Oigara’s non-cash benefits dropped to Sh300,000 last year from Sh1 million the previous year.

At the time of his appointment as CEO in January 2013, at the age of 37, Mr Oigara was the youngest leader of a publicly-traded bank. He was poached from Bamburi Cement in November 2011 as a chief financial officer, before his surprise elevation to replace Martin Oduor-Otieno as CEO.

Like Mr Oigara’s, KCB Group chief financial officer Lawrence Kimathi’s pay rose by 12.84 percent from Sh81.8 million to Sh92.3 million last year, boosted mainly by an increase in salary, gratuity and a deferred bonus. Mr Kimathi’s basic pay also went up by Sh8.8 million to Sh40.8 million.