Power In The Boardroom

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Sunday, August 09, 2020 / 06:40 AM / By Proshare Research / Header Image Credit: EcoGraphics

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Boardroom power is critical in deciding how much pay a CEO earns per annum. The stronger the CEO's Boardroom influence, the higher his or her likely pay, the converse is also true, the lower the influence of a chief executive over his or her the Board the lower the amount of remuneration expected at the end of the year. Another trend observed in the course of analyzing data for this report shows that the remuneration of CEOs of companies with large foreign investment tends to be higher than local counterparts.


Large capitalization companies listed on the local bourse with significant foreign direct investment tend to reward top executives in notional dollar terms which when translated into Naira provides such executives above average compensation regardless of how well the local company performs. Of the top ten highest-earning executives of listed companies on the NSE, seven are foreigners while three are Nigerians; of the top five highest-earning CEOs, three are Nigerians and two foreigners. Non-Nigerian CEOs of local Nigerian companies tend to exert a strong influence over the local Board of Directors, meaning that these CEOs are equally in Proshare's upper right-hand quadrant of its Board Power Matrix.

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The slight difference between the Boards of foreign-owned companies and Nigerian-owned companies in the upper right quadrant is that the dividend payout policy for foreign-owned companies is significantly more generous. The higher dividend-payout policy is understandable as foreign investors are likely to want to take out cash dividends as quickly as possible to hedge political and economic risks. The Boards of the foreign-owned companies are usually strong and populated with Nigerians of strong business and financial pedigree, examples of this is Nigerian Breweries Plc, Guinness Nigeria Plc and Unilever Plc which have prominent Nigerian businessmen and women as either independent or non-executive directors.


Illustration 11: Boardroom Power Matrix

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Despite a general perception that women can equally perform well as corporate managers, in Nigeria's top highest-paid executives not a single woman is featured. Not a single woman appears in the top 20 highest-paid CEOs of companies listed on the NSE.

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The absence of a woman on the list of the top 20 most highly paid executives of companies on the NSE speaks to the relatively weak corporate positioning of women in Nigerian Boardrooms; while it is true that women like Ibukun Awosika of First Bank of Nigeria (FBN) are Chairpersons of top-rated institutions, Awosika is an exception rather than the rule and her position as a non-executive Chairperson does not place her in the highest ranks of corporate income earners in executive Boardrooms of listed companies.


Nigeria can take a cue from Germany who passed legislation in 2015 requiring major companies to allot 30 percent of seats on non-executive boards to women, as the survey found females remain grossly under-represented in business life.


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Downloadable Versions of 2020 Report (PDF)

1.      Executive Summary: CEO Remuneration 2020 Report - Paying the CEO in a Pandemic; The Unanswered Questions  July 30, 2020

2.     Full Report: CEO Remuneration 2020 Report - Paying the CEO in a Pandemic; The Unanswered Questions  July 30, 2020


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Previous Year's Report and Links

1.          CEO Remuneration 2019 Report: Making Sense of the Numbers for Listed Companies in Nigeria  July 30, 2019

2.         Full Report: CEO Remuneration 2019 Report - Making Sense of the Numbers for Listed Companies in Nigeria   July 30, 2019

3.     All Quoted Companies IR Pages - Proshare MARKETS


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Related News from CEO Remuneration 2020 Report

  1. Executive Compensation and Shareholders Value Creation
  2. COVID-19 and The New Compensation Normal
  3. The Upside of Rationality
  4. Nigeria's Top Ten Income Earning Executives
  5. The Many Sides of CEO Compensation
  6. Executive Pay and Theoretical Approaches
  7. Between 2019 and 2020: Understanding The New Realities of CEO Remuneration
  8. CEO Remuneration 2020 Report - Paying the CEO in a Pandemic; The Unanswered Questions

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Proshare Nigeria Pvt. Ltd.

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