One of the findings of a survey conducted by KPMG show that cash compensation forms a higher proportion of Non-Executive Director (NED) pay.
A breakdown of the compensation indicated that 61 percent accounts for cash compensation of chairman of the board and 39 percent remain as the benefit. For the NED, 86 percent constitutes cash compensation while 14 percent is the benefit.
KPMG last week unveiled the 2017 survey of Board Remuneration in the top 25 capitalised companies on the Nigerian Stock Exchange (NSE).
The survey among others enables management meet corporate governance requirements on NED pay contribute to the development of reward practices in Nigeria, and also provides the basis for companies to undertake a periodic peer review of compensation and remuneration levels based on the provisions of the Securities and Exchange Commission (SEC) Code of Corporate governance. This according to Adewale Ajayi partner, tax regulatory and people services KPMG in Nigeria, will enable the Boards of directors to ensure the remuneration of their Directors remain competitive.
Ajayi said the board plays a critical role in steering a company to great heights of performance and growth. To enhance the quality of board directors, improve board effectiveness and accountability, he said it is important that boards remuneration is kept at levels that enables companies to attract, motivate and retain directors with the requisite knowledge, experience and network.
Speaking during the launch, Nneka Jethro-Iruobe, manager, tax regulatory and people service KPMG Nigeria, said directors’ fees for the Chairman of the Board typically differ from those paid to other NEDs. The median Directors’ Fees for the Chairman in the top 25 companies is almost twice that for the Other NEDs. The median fees are N4.2 million and N2.1 million for the Chairman and other NEDs, respectively.
She said over 50 percent of companies provide per diem to cover for living expenses and out-of-pocket expenses during official trips. This amount may be sufficient for accommodation, feeding and/or transportation in situations where the Company does not directly provide any of these.
Status Car and Related Benefits (including Fuelling, Maintenance and Driver) are provided by over 50 percent of the companies to the Chairman of the Board only.
Boluwaji Apanpa, Senior Manager, Tax Regulatory and people service KPMG Nigeria, said the over-riding principle for setting remuneration should be to avoid paying more than is necessary. “Typically, the key remuneration include: company size and performance, responsibility and efforts required, competitiveness, financial size and Efficiency analysis.”
Damilola Akinduro, Manager, Tax, Regulatory and people service KPMG Nigeria, added that the objective of the analysis is to provide an indication of the relative size, level of productivity and efficiency across the participating companies which I’m turn gives an indication of their relative abilities to pay and sustain remuneration.
HOPE MOSES-ASHIKE, CHINYERE OKEKE
