The highest paid bank, insurance board chairs

bank insurance boards
Peter Munga, Equity Bank, Japheth Magomere, CIC, John Murugu, Coop Bank and Charles Muchene, Barclays Bank. FILE PHOTOS | NMG 

Co-operative Bank #ticker:COOP chairman John Murugu was the highest paid board chairman among Nairobi Securities Exchange (NSE) listed financial firms last year taking home Sh19 million in allowances, an analysis of the companies’ annual reports has shown.

The financial reports filed by 11 banks and six insurance firms show that non-executive directors were paid a total of Sh685 million last year, a slight increase from the Sh679.6 million they earned in 2017.

The lenders and insurance firms paid their board chairs a total of Sh94.39 million last year, up 15 percent from Sh81.96 million in 2017.

Listed firms are by law obligated to disclose all payments made to board members to boost transparency and good governance practices.

Former Attorney-General Githu Muigai in 2017 drafted amendments to the Companies Act that made it compulsory to disclose board and senior management compensation for all listed companies to give investors a parameter for comparing their remuneration against company performance.


The board members are ordinarily elected at annual general meetings to oversee the running of companies on behalf of other investors.

Former Equity Bank #ticker:EQTY chairman Peter Munga was paid Sh7.41 million last year. He left the post in June 2018 however, and was replaced by Mr David Ansell whose allowances stood at Sh1.83 million by end of the year.

Barclays Kenya chairman Charles Muchene’s 2018 compensation stood at Sh7.39 million, compared to Sh6.6 million in 2017.

KCB Group chairman Andrew Kairu, #ticker:KCB who took over leadership of the bank’s board from Ngeny Biwott in October 2018, was paid Sh7 million in allowances last year. Mr Biwott earned Sh6 million in allowances during the year.

In the year ended December 2017, Mr Biwott received total earnings of Sh13 million, which made him the highest-paid board chairman in the banking industry in the period.

Among the listed insurance companies, the highest pay went to CIC Holdings’ long-serving chairman Japheth Magomere at Sh7.94 million, up from Sh7.33 million in 2017.

Britam’s #ticker:BRIT Andrew Hollas was paid Sh6.35 million. He was appointed the insurer’s chairman in August 2017, replacing Francis Muthaura.

Mr Murugu, who had previously worked at the Treasury and CBK, took over as chairman of Co-operative Bank on October 1, 2017, having been a member of the board since May 2015.

Banking experience

He previously served as the director of debt management at the Ministry of Finance, and also boasts more than 25 years of banking experience at CBK where he rose through the ranks to become director in charge of bank supervision.

Along with the other non-executive directors, board chairmen are paid sitting allowances, monthly retainers and travel allowances.

They are, however, not full time employees of the institutions and do not make day-to-day management decisions.

“Non-executive directors are paid a monthly retainer as well as a sitting allowance for every meeting attended. The directors are not eligible for pension scheme membership and do not participate in the bank’s remuneration schemes,” Cooperative Bank says in its 2018 annual report.

“Board of Directors (Non-Executive) are not on full-time employment by the bank and the compensation is by way of paying allowances per board session and an annual honorarium based on the banks performance.”

For Mr Murugu, responsibility allowance accounted for the largest share of his 2018 pay at Sh6.17 million, followed by a honorarium of Sh4.67 million and monthly retainers which totalled Sh4.71 million during the year.

Chief executive officers, who also sit on the board, are however paid much more due to their executive role that involves the day-to-day running of the businesses.

Chief financial officers also count as key personnel in listed firms, with their pay having to be disclosed along with that of the board and CEOs’ earnings.

Mixed performances

CEOs of the listed banks and insurance firms were paid a total of Sh1.521 billion, up marginally from Sh1.519 billion in 2017, which reflected the mixed performances of the firms where banks grew their profits while most insurers struggled.

In the NSE, #ticker:NSE directors are appointed for their professional services and experience, which is seen as necessary when providing leadership in companies. Others are owners doubling as board members to watch over their investments.

Companies compensate the directors in order to attract qualified individuals, who also face legal exposure in the event of negligence, mis-statements and fraud; among other corporate malpractices.

2018 was the second year of companies having to disclose the details of their directors’ pay.

The Companies Act was amended in July 2017 compelling the firms to publish remuneration details, with previous efforts spearheaded by the Capital Markets Authority from 2014 having failed to take hold.

Payment to directors was previously published as an aggregate amount, leaving shareholders to guess what the executives or board members took home.

The remuneration reports also detail the number of board meetings or board committee meetings attended by each director.