Safaricom CEO, board pocket eye-watering Sh534m in 2022

Safaricom Chairman Adil Khawaja (centre) with CEO Peter Ndegwa (right) and Chief Finance Officer Dilip Pal during the release of the telco's 2022- 2023 financial year results in May. [Wilberforce Okwiri, Standard]

Safaricom Chief Executive Peter Ndegwa and the giant telco’s executive directors took home annual gross compensation of more than Sh500 million for the year ended March this year as the company pulled all stops to retain top talent.

The compensation package of Sh534 million was Sh62 million more than the Sh471 million Mr Ndegwa and the board took home a year earlier, Safaricom has said.

Mr Ndegwa took home an annual gross pay of Sh313.11 million on the back of higher bonuses and an attractive compensation package, filings by Safaricom show. This was Sh24 million more, or an increase of 8.37 per cent, compared to the Sh288 million he got a year earlier.

Like other Kenyan corporates, Safaricom, east Africa’s most profitable company, which is struggling to retain and protect its massive revenues, has been pulling out all the stops to keep its top managers and board members happy and to woo and retain them.

Blue chip companies' CEOs often enjoy packages including luxury holidays, wardrobe allowances, car and personal drivers, bodyguards, private club membership, housing, entertainment allowance, and elite school fees benefits.

“Besides the basic salary, the (Safaricom) Executive Director is entitled to an annual performance-based bonus and shares, residential accommodation, utility bills payment and club membership,” says Safaricom on its CEO compensation policy.

Mr Ndegwa, 54, took the reins of Safaricom on April 1 2020, becoming the first Kenyan to serve in the role. Safaricom has revealed he earned an annual salary of Sh88.89 million or the equivalent of Sh7.4 million a month.

He also earned a bonus in cash of Sh178.88 million and non-cash benefits of Sh21.16 million.

Chief Finance Officer Dilip Pal took home a total of Sh87.73 million in annual pay.

This comprised an annual salary of Sh54 million, or Sh4.5 million per month, and a bonus and non-cash benefits of Sh13.7 million and Sh19.91 million respectively. Safaricom’s current and former directors at the same took home Sh105 million during the period.

They included Michael Joseph (Sh21 million), John Ngumi (Sh10.97 million), and Bitange Ndemo (Sh5.88 million).

Prof Ndemo and Mr Ngumi have since quit the company’s board after a shake-up that ushered in other new directors.

Safaricom’s non-executive directors are compensated in fees but are not entitled to any pension, bonus or long-term incentives such as performance share plans.

The telco gives an annual retainer fee for its board chairman and other non-executive directors, which is paid quarterly.

It also gives sitting allowances for board and board committee meetings. It reimburses expenses incurred with travel, accommodation, pre-approved consultancy fees or other expenses incurred as a result of carrying out duties as a director.

Annual directors’ fees paid to the chairman of the board are agreed at Sh8.5 million per annum, while the annual directors’ fees paid to each non-executive director are set at Sh3 million per annum. The chairman also gets a sitting allowance retained at Sh230,000 per meeting, while a sitting allowance payable to each non-executive director is set at Sh110,000 per meeting.

“The company’s policy is to remunerate its non-executive directors at the desired position, to pay at least at the 75th percentile of the market,” says Safaricom on its compensation policy for non-executive directors.

“This ensures that the company is competitive in sourcing and retaining its directors.”

Safaricom, part-owned by South Africa’s Vodacom and Britain’s Vodafone, is under pressure to create new revenue streams as its voice business matures.

It has consequently been eyeing to diversify its income from voice, short message services, cash transfers and payments. Safaricom posted a 22.2 per cent decline in net profit for the full year ended March 2023, the third consecutive drop in earnings attributing the drop to heavy capital investments in Ethiopia and a tough business environment.

Profit stood at Sh52.48 billion, down from Sh67.49 billion posted in the previous period.

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