Some of the perks CEOs enjoy include flying on private jets or first
class, entertainment and holiday allowances. file photo | nmg
Summary
- Executive recruiters say the CEOs want to be surrounded with “right team” that shares in the vision for the company as this determines whether or not they will be successful in their career.
- Most of them do not usually influence who sits on the board, but look at its composition before deciding to occupy the C-suite.
- According to independent analyst Aly Khan Satchu, the hunt for talent has fuelled the rush to pamper senior executives.
When a Harvard trained 50-year-old executive—who sought
anonymity for privacy purposes — landed the plum post of a chief
executive of a Nairobi blue chip company, fresh from his stint as a
senior manager at an American based lender, he was offered a salary of
Sh5 million.
But that was not all; the married
executive with a young family of two was also offered round-the-clock
security, access to a private jet for official trips, a personal chef, a
personal trainer and an armoured luxury limousine.
Welcome to the envious perhaps outrageous world of executive privileges for a few elite Kenyan CEOs and senior executives.
For
the average employee the pursuit of a “benefits package” resembles
images of a huge cash compensation which may include salary, bonuses and
stock options. Not for this group of highly paid pampered CEOS. Blue
chip companies in Kenyan are pulling out all the stops to keep their top
managers happy.
Company boards are making big bets
with corporate executives, offering them luxurious privileges in their
contracts to woo and retain them.
These include luxury
holidays, wardrobe allowances, car and personal drivers, bodyguards,
private club membership, housing, entertainment allowance, elite school
fees benefits.
Some of the other perks the CEOs enjoy
include flying on private jets or first class, entertainment and holiday
allowances, country club and gym memberships, mortgages and worldwide
medical covers which enables them to seek treatment abroad.
Other perks include reimbursement for taxes paid.
“Surprisingly
it is not only the multinationals and big companies doing it. We
recruit for top medium-sized firms and in the last couple of years they
have started to offer perks to their senior executive staff with the
main goal being to retain them and spur productivity,” says Perminus
Wainaina, the managing partner of Kenyan recruitment agency Corporate
Staffing Services.
The modern-day CEO of a blue chip firm is a different breed of a leader from what we have always known.
The
CEO’s basic monthly pay ranges from $8,000 (Sh825,840) to $20,000
(Sh2.06 million) based on quality, skills and expertise, with adds-on in
bonuses and mileage.
But to them, however, it is not always about the salary.
“If
an executive is to focus all their energies on a company then they need
some things taken care of as a minimum,” adds Mr Wainaina.
“This
includes profit share/bonuses, club membership, housing (and
specifically the neighbourhood , entertainment allowance, school fees,
and an enhanced medical cover. Some also request for a risk and travel
allowance.”
He
explains that for most chief executives, top of mind is the usual
benefits that include medical, car, entertainment, education, housing
and bonuses.
“We also have clients who sponsor their
executive staff with a self-development course or programme of their
choice once a year outside the country. Another is where executive staff
become shareholders after serving for a given duration,” he says.
This
is not all as autonomy and flexibility in making decisions, right team
on board and senior management, and innovation are some of the key
factors that are increasingly shaping decision to occupy the C-suite of a
large firm, executive recruiters say.
Separate perks
Farah
Samanani, the managing partner of Boyden East Africa, a subsidiary of
the New York-headquartered global executive recruitment giant, says
while CEOs still enjoy some of these privileges, most of them do not
want them as separate perks in their contracts. Having them as a
separate perks may mean forfeit some of them as they are renewed
annually.
“What I notice that they have some higher
preference to have some ability to be flexible around the pay package
and so they might want to have more base pay and then decide how they
want to allocate that as opposed to having a lot of perks as may have
been the case in the case where you had air fares, club membership and
all those things,” Ms Samanani said in an interview.
The ability
to choose how they want to spend from the (CEO) package usually drives
at desire to have autonomy in making decisions, although they
usually prefer to be consultative with their boards and management
team.”
Boyden East Africa has clients in demanding sectors such as banking, insurance and telecommunications.
The
CEOs are also keen on some autonomy in making corporate decisions
through a consultative process at board and senior managerial level.
This way, a majority feel they are able to impact change in that will
yield desired returns for shareholders as well as growing their wealth.
“This
is a market where there’s potential to do so much because it is not yet
developed, and so you find that the CEOs want to get out there, leave a
mark and say ‘this is what I have done, this is how I have changed
things, this is how I have rethought this business or sector’,” Ms
Samanani said. And to achieve the desired outcome, the C-suite
executives have keen interest on the team they work with in realising
the corporate vision.
They are particularly keen on the
composition of the board who are decision makers on the corporate
policy and strategy, investors who look for funds and senior manager who
run the business.
Clear career path
Executive
recruiters say the CEOs want to be surrounded with “right team” that
shares in the vision for the company as this determines whether or not
they will be successful in their career.
Most of them do not usually influence who sits on the board, but look at its composition before deciding to occupy the C-suite.
“Recently
we had a CEO who we were trying to convince to join a business that is
not well known here (East Africa), has a very innovative model but not
tested, and it is not clear it is going to be successful,” Ms Samanani
explained.
ALSO READ: Kenya's little-known billionaires
“What
convinced the person to join was a real high calibre, well experienced
board. Once the person met all the board members, he felt this
is actually somewhere ‘I can grow and learn and be successful’ because
the board had a vision and he shared that vision.”
According to independent analyst Aly Khan Satchu, the hunt for talent has fuelled the rush to pamper senior executives.
Mr
Satchu says companies realise CEOs can be the difference between
success or failure for companies hence the craze for companies to outdo
each other in offering privileges.
“A singular
corporate leader can create outstanding and exponential value for a
company’s shareholders. Just look at companies like Apple under Steve
Jobs, Ali Baba under Jack Ma and more,” he says.
“So there is no problem paying up for CEO talent as long as the value is being created. Mr Collymore is a classic example of a CEO delivering exponential returns.”
“So there is no problem paying up for CEO talent as long as the value is being created. Mr Collymore is a classic example of a CEO delivering exponential returns.”
Most of the CEOs are also keen to share in the fortunes they help create by buying into the company.
Some
of the top-notch CEOs in the country are known to own some stakes in
the company they run. They include James Mwangi who control 5.52 per
cent stake in Equity Holdings, Benson Wairegi (4.64 per cent in Britam),
Gideon Muriuki (2.09 per cent in Co-op Bank as at 2013) and James
Mworia (0.61 per cent in Centum).
Safaricom’s CEO Bob Collymore also owns 1.52 million shares.
ALSO SEE: Why Kenya’s super-rich stay invisible
Besides Employee Stock Ownership Plan (ESOP), some CEOs also look for a clear career path opportunity after serving their term.
“When
you are at the top of your game and your term ends, where do you go,
what do you do next, is there a position that is part of a group level
or is there an international component? That’s sometimes quite hard for a
CEO and they want to know what has been provided,” Ms Samanani said.
cmunda@ke.nationmedia.com
bnjoroge@ke.nationmedia.com
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