Chief Executive officers are presumed to be immune to the company’s tough policies given that many company boards pull out all the stops to make the bosses happy. However, this is not usually the case for many firms.
Centum Investment CEO James Mworia’s failure to meet his performance targets cost him 75 % salary reduction to Sh45 million in 2018 after he missed out on bonus earnings.
In the year ended March 2018, he earned Sh177.6 million, an equivalent of Sh14.7 million per month, all-inclusive of a bonus of Sh132 million.
Centum’s bonus system is structured in a way that it incentivizes its staff to be more productive and produce more returns for the shareholder funds for which they get rewarded.
However, during the year under review, the firm’s cash returns failed to hit the minimum threshold required to trigger bonus payments for employees.
“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,” Mr Mworia told Business Daily.
Mr Mworia is not new to reduced salaries, last year, his package was reduced by 19 percent from 219.2 million recorded during the previous year.
In the year ended March 2019, the firm’s Investment income fell from Sh3.5 billion to Sh3.2 billion due to lower interest earnings and reduced dividends this is despite the Group’s net profit rising by 48 percent to Sh4.12 billion.
Mr Mworia was previously named corporate Kenya’s fourth best-paid manager.