Companies are gearing up for the Capital Markets Authority’s new rule: the disclosure of salaries of chief executive officers.
In the past, the remuneration of these executives was not disclosed as it was considered sensitive information by firms.
Last week, a number of listed companies disclosed their executives’ pay.
In my view, it is not enough to publicise the salaries.
An increase in the remuneration of the top executives should be approved if the workers’ wages are increased by a similar margin.
The disclosures showed that CEOs in Kenya are making exponentially more money than the public think they should.
They indicate that the top bosses are being disproportionately rewarded, supposedly at the expense of other workers.
Forcing disclosure will shame firms and they may lower the pay. At the same time, investors and customers can end up boycotting firms with overpaid bosses.
I strongly believe that the executive pay should be reviewed. My own research shows substantial benefits to firms if they treat their workers fairly.
Disclosure of pay may, however, have unintended consequences that end up hurting workers.
A CEO may outsource low-paying jobs, hire more part-time workers than full-time ones, or invest in automation rather than labour.
NDIRANGU NGUNJIRI, Nairobi.