Stanchart chief executive Kariuki Ngari (left), NCBA boss John Gachora (centre) and Absa’s Jeremy Awori. FILE PHOTOS | NMG Ten Nairobi Securities Exchange-listed firms cut their executive bonuses by Sh284 million last year in the wake of reduced profitability that was largely caused by the economic fallout from the Covid-19 pandemic.
KCB , Absa Bank Kenya , Britam , NCBA and Bamburi Cement among the firms that either suspended or reduced executive bonuses as part of cost-cutting measures that also saw companies lay off hundreds of rank-and-file workers.
The banking sector, for instance, posted a 20 percent drop in net profit to Sh88 billion in the year ended December compared to Sh110.1 billion a year earlier, according to Central Bank of Kenya (CBK) data.
This hurt bonus payouts to bank executives, including CEOs of KCB, NCBA, Absa and StanChart .
The weaker bank earnings were mainly caused by loan loss provision swelling to Sh110.2 billion from Sh39.2 billion as the lenders braced for increased defaults in the wake of increased job losses, lockdowns and business disruption in the pandemic era.
With few exceptions, executives suffered reduced or zero bonuses to contribute to their companies’ cost-cutting efforts and also demonstrate solidarity with ordinary employees who also missed bonuses and took pay cuts in some cases.
Banks, which have traditionally paid the largest bonuses on rising profits in the past, led in trimming the cash incentives in the review period.
Four firms — KCB, NCBA, Britam and Liberty Holdings — suspended bonus payouts to their executives while six (Absa, StanChart, Bamburi, BOC Kenya, Longhorn and Unga Group) reduced the cash incentives.
KCB’s chief executive, Joshua Oigara, missed out on bonus payment unlike in the previous year when he took home Sh193.7 million — Sh145.3 million in cash and Sh48.4 million deferred.
The bank’s chief financial officer, Lawrence Kimathi, also did not earn any bonus unlike in 2019 when he received Sh29.4 million and Sh9.8 million in cash and deferred respectively.
The missed bonuses came as the lender’s net profit fell 22 percent to Sh19.6 billion in the year ended December on the back of increased provisions for coronavirus-related loan defaults.“Executive directors are entitled to a performance-based bonus pay. Each year, 25 percent of the bonus is retained with the payment of the retained portion being deferred to be paid over a period of the three subsequent years,” says KCB.NCBA Group chief executive John Gachora and the finance director David Abwoga also […]