Unga Group CEO Nicholas Hutchinson got a
54.4 per cent pay rise in the year ended June when the human and animal
feed miller slipped into a Sh32.2 million loss, the company’s latest
financial report shows.
The Unga board also got an
aggregate pay increase of 49.5 per cent while employees’ salaries rose
by a relatively modest margin of 14 per cent, the firm says in
disclosures that are expected to give shareholders insight into the
company’s cost structure.
The debate on management and
board pay is expected to increasingly come to the fore following an
August legislation requiring more detailed reporting and disclosure for
listed firms.
Mr Hutchinson’s salary – his only
entitlement besides a variable bonus — jumped to Sh1.26 million per
month in the review period, from Sh820,000 the prior year.
“Unga’s
aim is to achieve an integrated approach to reward, linking company
strategy in the form of the achievement of corporate objectives and
individual performance to salary increases and bonus awards,” the miller
says in the report.
The CEO may get a bonus if the
miller attains 85 per cent of the target profit before tax, with the
amount paid in cash soon after approval by the board.
Other
directors saw their fees – their only entitlement — rise by a range of
26.4 per cent to 64.4 per cent over the same period.
Andrew Ndegwa, whose family has a controlling stake in the
miller, had the largest pay bump of 64.4 per cent to Sh229,583 per
month.
The money was, however, not paid to him
personally but to First Chartered Securities – the Ndegwas’ investment
holding company — which nominated him to Unga’s board.
Fees
paid to the miller’s chairperson, Isabella Ochola-Wilson, rose 44.9 per
cent to Sh321,250 while Patrick Obath’s earnings jumped 41.8 per cent
to Sh199,167 per month.
Alan McKittrick’s fees
increased 36.8 per cent to Sh197,917 while Jinaro Kibet’s compensation
rose by a third to Sh196,250. Shilpa Haria, who joined the board in
September last year, earned an average of Sh105,417 for each of the 10
months ended June. She was appointed to replace Mary M’Mukindia who
resigned in April last year.
Ms
M’Mukindia earned an average of Sh53,750 for each of the 10 months she
served to her departure. Unga says the across-the-board pay hikes came
after a remuneration survey and a job evaluation conducted in the
previous year.
Their implementation, however,
coincided with a rare loss in the company’s recent history driven by
what the firm termed operational challenges and a troubled acquisition.
The
miller descended from a net profit of Sh508.8 million in the previous
year to report the Sh32.2 million net loss in the review period. It lost
Sh118.9 million in its Ugandan operation, which it closed indefinitely.
Its
investment in Ennsvalley Bakery was also hit by the financial troubles
facing its key distributor, Nakumatt Holdings. This saw the miller write
down the value of the subsidiary – in which it initially acquired a 52
per cent stake for Sh465.2 million — by Sh151 million.
Unga,
however, doubled down and acquired the 48 per cent it did not already
own in the bakery by buying out the minority investors for Sh70 million.
The non-controlling interests apparently took a major
haircut in the second transaction, allowing the miller to book a gain
of Sh153 million in the deal.
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