Monday, August 03, 2020 / 05:50 AM / By Proshare
Research / Header Image Credit: EcoGraphics
Explaining executive compensation: It's complicated. - Kevin Murphy
In Nigeria, the sectors that appear to be the most rewarding in terms of executive remuneration are the oil & gas sector, banking sector, telecommunication sector as well as the consumer goods sector. MTN's CEO, Mr. Moolman led the list of the highest-paid CEO in Nigeria in 2019
The emergence of the COVID-19 pandemic would most likely lead to a change in the narrative of the most profitable sector in Nigeria. The virus has negatively affected the oil sector in Nigeria. Due to the restrictions in movements, there has been a decline in the demand for oil which hurt sales revenue and profit. The banking sector has also not been spared from the crisis. The oil sector appears to be the largest recipient of loan credits from banks, but due to the decline in oil sales and uncertainty that has hit the sector, banks have had to increase their loan impairments which have affected their profitability.
During pandemics, consumers tend to focus on the purchase of essential commodities. Firms in the consumer goods industry will react differently to the pandemic virus. Firms that produce essential commodities would not be greatly affected by the spread of the virus (in terms of demand for their product) but they are not immune from disruptions in global supply chains, while other firms that produce other types of consumer goods would have to rethink their strategies to boost sales amidst the health crisis.
Technology and telecommunication firms appear to be winners from this crisis, as companies have resulted in virtual meetings to ensure business continuity. There has been an increase in the use of data and voice calls. Therefore, it is expected that telecommunication firms would report a rise in sales revenue and profit despite the coronavirus pandemic.
Healthcare firms involved in the production of drugs and personal protective equipment used in the management of the coronavirus would most likely record a rise in their revenue and profits generated. While firms in the agricultural sector, the industrial goods sector, and construction firm would have to rethink their business model and strategies to stay afloat during this crisis.
Due to the decline in economic activities which has adversely affected sales and revenue generation, many CEOs in Nigeria are unlikely to witness a rise in their remuneration in 2020. Most firms would instead shift focus towards staying afloat, reducing operational cost, increasing efficiency, and productivity.
The breakdown of the sectors with the highest number of highest-paid CEOs consist of the following; 4 CEOs with the highest remuneration were from the consumer goods sector, 1 from the ICT sector, 2 from the oil and gas sector, 1 from the banking sector, 1 from industrial goods sector and 1 from the construction and real estate sector.
The top three highest-paid executives in the banking sector in 2019 were Mr. Segun Agbaje of GTBank Plc, Mr. Emeka Emuwa of Union Bank of Nigeria Plc, and Mr. Yinka Sanni of Stanbic IBTC Holdings Plc. Mr. Segun Agbaje earned N399.7m, Mr. Emeka Emuwa earned N172m while Yinka Sanni of Stanbic IBTC Holdings Plc earned N155m in 2019.
In contrast to previous years, the highest-paid executive's remuneration in the banking sector was not closely knitted to the profit generated in the year. The only exemption was GTBank which recorded the second-highest profit before tax of N243m in 2019 and consequently paid its director the highest remuneration in the sector.
It is expected that the higher the profit a bank generates, the higher the remuneration that accrues to its executive directors. But this narrative has been incorrect for the Banking sector in 2019. Stanbic IBTC Bank and Union Bank which recorded relatively lower Profit Before Tax of N90.93bn and N24.84bn respectively in 2019 climbed up the ladder of the highest-paid executives in the sector (see Table 1).
Table 1: Highest Paid Executives in Banking Sector
Oil & Gas
Oando's financial result for the year ended 2019 was yet to be released as at the time this report was written, hence its financial results for 2018 was used instead. Wale Tinubu, CEO of oil major Oando earned N568m in 2018. His compensation was +42.11% higher than the highest-paid executive director in the banking sector, Mr. Segun Agbaje of GTBank. The second-highest paid executive in the Oil & Gas sector was Ojunekwu Augustine Avuru, CEO of Seplat Petroleum Development Company, Avuru took home an annual pay of N440m which was +29.1% lower than Oando's Tinubu but +169.24% higher than the third highest-paid executive director in the Oil & Gas sector, Mr. Imrane Barry of Total Nigeria Plc.
Information on Ardova Plc (Formerly Forte Oil Plc) CEO's pay could not be ascertained as at the time this report was written. Therefore, the next in line was Mr. Imrane Barry of Total Nigeria Plc. Barry was the third-highest pay earner in the industry with an annual remuneration of N163.42m. Barry's earning was +5.43% higher than the third highest-paid bank CEO in Nigeria which was Stanbic IBTC's Yinka Sanni. In comparison with the banking sector, the oil sector still stands as a better rewarding sector (see Table 2).
Table 2: Highest Paid Executives in Oil & Gas Sector
MTN's Ferdinand Moolman led the highest earners chart in the ICT sector with an annual remuneration of N585.94m. Moolman was the highest-earning CEO in Nigeria for the year ended in 2019. Moolman's remuneration increased by +2.61% in 2019.
James Agada of CWG Plc came in second place as the highest-earning CEO in the ICT sector. Agada's annual remuneration was N47.2m in 2019, which was +1,141.39% lower than the remuneration earned by Moolman of MTN. Agada's remuneration declined by -52.33% in 2019 (see Table 3).
Table 3: Highest Paid Executives in ICT
UACN Plc CEO, Mr. Folasope Aiyesimoju earned the highest among the listed conglomerates on Nigeria Stock Exchange. Aiyesimoju's annual remuneration in 2019 was N127.6m, a significant rise of +212.36% from his last year's annual earnings.
Adim Jibunoh lost his top spot to end second place as the highest-earning CEO among conglomerates listed on NSE in 2019. Mr. Jibunoh's annual remuneration which was unchanged from 2018 was N100.21m (see Table 4).
Table 4: Highest Paid Executives in Conglomerates
CEO's in the healthcare sector recorded the second-lowest pay amongst the various categories of sectors listed on the Nigeria Stock Exchange. The highest-paid executive in the sector was Fidson Healthcare Plc CEO, Mr. Fidelis Ayebae, who earned an annual remuneration of N40m. His annual remuneration grew significantly by +14.28% in 2019.
GlaxoSmithKline Consumer Nigeria Plc's CEO Mr. Kunle Oyelana was the second-highest earning CEO in the healthcare sector. Mr. Kunle Oyelana's appointment as the new CEO of GlaxoSmithKline Consumer Nigeria Plc took effect from June 1st, 2019. Mr. Kunle Oyelana earned an annual remuneration of N36.96m in 2019.
Neimeth International Pharmaceuticals Plc CEO, Pharma. M.O Azoji was the third highest-paid CEO in the healthcare industry. Azoji earned an annual remuneration of N28.34m in 2019. His annual remuneration was +41.14% lower than Ayebae's remuneration and +30.4% lower than Oyalana's remuneration in 2019 (see Table 5).
Table 5: Highest Paid Executives in Healthcare
Corporate CEO's in the agricultural sector listed on the Nigeria Stock received the lowest annual remuneration in 2019. The highest-paid CEO in the sector was Mr. Graham Hefer, CEO of Okomu Oil Palm Plc, who earned an annual remuneration of N11.55m in 2019. Hefer recorded an increase of +15.5% in his annual remuneration in 2019 toppling CEO of Livestock Feeds Plc who was the highest earner in the sector last year.
There was a change in management in Livestock Feeds Plc. Mr. Solomon Aigbavboa resigned on 31st July 2019. While Mr. Adegboyega Adedeji assumed office as the new CEO on August 1st, 2019. Adedeji received an annual remuneration of N10.03m in 2019, which was +15.15% lower than the annual earnings of Hefer, CEO of Okomu Oil Palm Plc (Table 6).
Table 6: Highest Paid Executives in Agriculture
There is a large variability among executive pay in the construction sector. The variability is largely attributed to differences in the size of the companies, assets, turnover, profit, etc.
Dr. Lars Richter, the managing director of Julius Berger was the highest-earning CEO in the construction and real estate sector. He received an annual remuneration of N217.07m in 2019. Richter's pay was +32% lower than his predecessor's pay.
Folasope Aiyesimoju, managing director of UAC Property Development received annual remuneration of N19.62m in 2019. She was the second-highest-paid CEO in the construction and real estate sector. Aiyesimoju earned +1,006.37% lower than Dr. Richter's annual remuneration of N217.07m, which reflects the large disparity in earnings in the construction/real estate business.
A few equally larger construction firms are not listed on the NSE and do not make a representation of their executive remuneration; it would be reasonable to assume that the gap between the executive pay of firms in the sector would be narrower if the executive compensation data for none-quoted companies were made available (see Table 7).
Table 7: Highest Paid Executives in Construction & Real Estate
Baker Magunda of Guinness Nigeria Plc was the highest-paid CEO in the consumer goods sector in 2018. This narrative was different in 2019, as Mr. Yaw Nsarkoh of Unilever Nigeria Plc earned the highest annual remuneration in 2019. Nsarkoh earned an annual remuneration of N302.52m. His earned remuneration declined by -8.6%, as his remuneration declined from N331m in 2018 to N302.52m in 2019.
Mr. Maurico Alarcon of Nestle was the second-highest-paid CEO in the consumer goods sector. Alarcon received an annual pay of N218.08m in 2019. His earnings grew by +4.19% in 2019, as his earnings increased from N210m in 2018 to N218.08m in 2019.
Mr. Jordi Borrut Bel, CEO of Nigerian Breweries Plc was the third highest-paid CEO in the consumer goods sector. His earnings rose significantly from N190m in 2018 to N271m in 2019, an increase of +42%.
Surprisingly, Guinness Nigeria Plc CEO, Mr. Baker Magunda was the fourth highest-paid CEO in the consumer goods sector. Magunda recorded a significant decline in his annual earnings by -58.13%, as his annual earnings declined from N461m in 2018 to in N193m 2019 (see Table 8).
Table 8: Highest Paid Executives in Consumer Goods
In the industrial sector, Lafarge CEO Mr. Michel Purchercos was the highest-paid executive. Puchercos received an annual remuneration of N282.38m in 2019, a decline of -9.6% from N312.33m in 2018.
Mr. Onajite Okoloko of Notore Chemical Industries Plc was the second highest paid CEO in the industrial goods sector. His remuneration increased by +2.05%, increasing from N147.07m in 2018 to N150.09m in 2019.
While Dangote's CEO Mr. Joseph Makoju was the third highest-paid executive as he received an annual remuneration of N109m in 2019, a decline from N429m in 2018. Joseph Makoju retired as a board member and CEO in 2019 (see Table 9).
Table 9: Highest Paid Executives in Industrial Sector
Downloadable Versions of 2020 Report (PDF)
Previous Year's Report and Links
Related News from CEO Remuneration 2020 Report
1. Top 10 highest earning CEO's in Nigeria - Nairametrics - July 10, 2020
2. Tinubu, Avuru top list of highest paid CEOs of quoted Nigerian companies - BusinessDay - April 23, 2019