In 2023, the CEOs of the ten largest companies listed on the Nairobi Securities Exchange (NSE) experienced a significant reduction in their annual bonuses, losing a collectiveKES82.0mn due to stagnant profits and reduced shareholder dividends. Analysis of the firms’ annual reports reveals that these top executives receivedKES734.7 mn in bonuses for the 2023 financial year, down fromKES816.3 mn in 2022. Concurrently, total dividends distributed by these companies decreasedtoKES.112.8 bn fromKES119.0bn the previous year.
The companies analyzed include Safaricom, Equity Group, EABL, KCB, Co-operative Bank, Absa Bank Kenya, Standard Chartered Bank Kenya, NCBA Group, I&M Bank, and BAT Kenya. Notably, Stanbic Holdings, the ninth-largest NSE-listed company by market capitalization, does not disclose the Kenyan unit CEO’s pay breakdown.
Companies primarily reward their executives with performance-based bonuses to safeguard shareholder returns through improved profitability, reflecting their strategic leadership roles. These bonuses are tied to business performance metrics such as profit growth, cakesgeneration, stock market performance, shareholder returns, and new revenue development. Additionally, executives receive non-cakesrewards, including free shares under employee share ownership plans for long-term performance.
In 2023, the collective net earnings of these top NSE firms rose by just 1.6 p%toKES248.5 billion, amid challenging economic conditions such as high inflation, elevated interest rates increasing the cost of capital, and a weaker shilling raising the cost of imported inputs.
Safaricom, the largest NSE-listed company, saw its consolidated net profit for the year ending March 2024 rise marginally toKES63.0billion fromKES62.2 billion. The profitability growth was offset by losses from its Ethiopian subsidiary, leading to a reduction in its CEO’s bonus byKES62.2 million toKES134.1 million, while its dividend payout remained unchanged atKES1.2 per share orKES48.1billion.
Among the banks, the profit growth varied, with the two largest listed lenders, Equity Group and KCB, reporting profit declines of 6.5%and 8.3%to Sh41.9 billion and Sh37.5 billion, respectively. Equity’s CEO James Mwangi did not receive a bonus last year, having declined additional pay in solidarity with employees in subsidiaries that failed to meet performance targets. In 2022, he received aKES53.0million bonus. Equity also maintained its dividend atKES4.0per share, totalingKES15.1billion.
KCB’s CEO bonus fell to Sh69.04 million fromKES124.2 million, and the lender chose not to pay dividends to shareholders, having paidKES6.4 billion in 2022.
Other notable changes in CEO bonuses include Co-operative Bank increasing Gideon Muriuki’s bonus toKES301.1 million fromKES287.5 million, and NCBA Group raising John Gachora’s bonus toKES71.0million fromKES40.0million. Absa’s CEO bonus increased byKES3.5 million toKES28.0million during a leadership transition, while I&M Group’s executive director Sarit Raja Shah’s bonus rose toKES15.8 million fromKES5.7 million. Standard Chartered Bank Kenya CEO Kariuki Ngari’s bonus dropped toKES35.6 million fromKES39.8 million.
In the manufacturing sector, BAT Kenya’s CEO Crispin Achola received aKES13.1 million bonus, down fromKES14.7 million in 2022, with the company’s dividend payout declining toKES5.obillion fromKES5.7 billion. EABL increased its CEO Jane Karuku’s bonus toKES66.9 million fromKES30.9 million, despite a decrease in total dividend payout toKES4.4billion fromKES8.7 billion, and a drop in net profit toKES12.3 billion fromKES15.6 billion for the year ending June 2022.