Business

The Big Five and their top executives’ total salary

NBP president gets highest raise despite share price plunging 22%

Creative: Talha Khan/kazim Alam February 28, 2016

PHOTO: BRERECORDER

KARACHI:

Total remuneration of the National Bank of Pakistan (NBP) president increased 51% in 2015 despite the share price of the state-owned bank plummeting 22% over the same 12-month period.

According to the bank’s annual securities filing, NBP President Syed Ahmed Iqbal Ashraf received total compensation of Rs71.1 million last year, which was Rs23.9 million higher than the comparable figure for 2014.

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Meanwhile, the share price of NBP at the end of 2015 clocked up at Rs54.04, down 22.2% from the beginning of the year when it sold at Rs69.46.

Almost one-third of Ashraf’s total remuneration in 2015 was in the form of bonus. His bonus for 2015 clocked up at Rs23.3 million, which was 9.4 times higher on a year-on-year basis.

Although the share value of NBP declined by more than one-fourth over the year, the unconsolidated profit of the bank surged 27.9% to Rs19.2 billion for 2015. In percentage terms, NBP posted the highest year-on-year expansion in the net profit among the five largest commercial banks, also known as Big Five.

Although Ashraf received the highest raise in the total remuneration last year, he was hardly the highest paid bank CEO in Big Five.

Highest paid CEO

United Bank President and CEO Wajahat Husain topped the list with his total compensation in 2015 clocking up at Rs127.3 million. A year-on-year comparison of the UBL CEO’s total remuneration is not possible because the figure for 2014 (Rs246.5m) included Rs100.7 million paid as severance cost to its former CEO on the cessation of his employment.

Husain added almost Rs3.8 billon to UBL’s bottom line in 2015, as the bank’s unconsolidated profit for the year rose 17.3% to clock up at Rs25.7 billion. The share price of UBL, however, declined 12.3% over the 12-month period amid bearish trends on the local bourse.

Even if rent, utilities and medical allowances are excluded, the annual managerial remuneration of the UBL CEO translates into a compensation of over Rs9 million per month for 2015.

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UBL was the third most profitable bank in the country until 2014. But its net profit surpassed that of MCB Bank last year, making UBL the country’s second most profitable bank.

HBL

Another bank CEO who received a major raise last year in his total remuneration was Nauman Dar of Habib Bank (HBL). His total remuneration jumped 41.3% in 2015 to reach Rs75.1 million. Meanwhile, the share price of HBL dropped 7.4% to reach Rs200.12 on Dec 31, 2015.

HBL is the largest banking entity in Pakistan in terms of both profitability and branch network. Its net profit went up 14% last year to reach Rs35.4 billion, which was Rs9.7 billion higher than its closest competitor.

MCB Bank

MCB Bank CEO Imran Maqbool was the second-best paid among the CEOs of the Big Five cohort. His total remuneration for 2015 clocked up at Rs84.7 million, up 14.9% from a year ago. However, the share of MCB Bank shed as much as 29% over the same 12-month period.

The year-on-year decline in the share price of MCB Bank was far greater than the corresponding drop in share prices of the rest of the largest banks. MCB Bank’s unconsolidated profit for 2015 amounted to Rs25.5 billion, up 5% from a year ago.

ABL

Allied Bank (ABL) CEO Tariq Mahmood received total remuneration of Rs46.3 million in 2015, up 7% from a year ago. His total compensation for 2015 was the lowest among his peers at the other four banks.

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The share price of ABL declined more than 17% last year while its net profit amounted to Rs15.1 billion, up only 0.7% from a year ago. Yet he received a bonus of Rs19 million, which is 41% of Mahmood’s total annual compensation for 2015.

The writer is a staff correspondent

Published in The Express Tribune, February 29^th, 2016.

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COMMENTS (15)

sardar zaheer | 8 years ago | Reply ET should also spend some time to investigate earnings to major share holders of these banks and their names as well as at the moment this seems a paid peace of writing supported by seths of bank...btw average pvt. ltd company owners or seth takes home 15-20 crore and some times 30-40 due to poor regularization of this segment and no one even knows how much they earn

Ali | 8 years ago | Reply I think an important factor here is that most presidents are majority shareholders i.e. the owners or their close relatives are CEO or Presidents. It would be interesting to know what other 'C' levels get. I know in a few listed seth companies that the CEO gets atleast 8 or 9 times what other Cs get as remuneration.

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AN | 8 years ago | Reply Good effort but not an appreciable analysis. Comparing salaries with share prices of Banks in current scenario where we are facing global economic slowdown and colossal fluctuations in global stock market particularly China is not good enough. Analyze the growth in business, profitability and decline in Non-performing loans. Further, compare the value of the banks by calculating Net present value of future cashflows. It must also be appreciated that despite continuous drop in Discount rate by SBP, banks are maintaining their profitability. I also have strong criticism that banks are paying peanuts to their depositors so ultimately their profits obviously have to soar. Core activity of banks is to lend, however, these banks are just investing in safe & secured government bonds so CEO’s performance can’t be linked with bank’s performance. So there are couple merits & demerits of exorbitant hikes in CEO’s salary. One should have more research logically to have a better understanding. Note: I’m not a banker.

syed & syed | 8 years ago | Reply The writer did not give carry home salary figures of middle and lower management who are vital parts of this gigantic machine called bank.The profit achievement is not of CEO it is due to the entire machine parts called staff

Ifzal Ahmad | 8 years ago | Reply We also should look at the drop in the share prices. For example take a look at the MCB share prices which dropped by 29% whereas, the compensation of CEO jumped up by 14.9%. How is it justifiable to the shareholders...?

Salim Beg | 8 years ago | Reply All , these high remuneration pays are Ugly ,see the difference between the haves and have nots. Even the salary differences between the teller and the president Salary is phenomenal This malaise has also creeped up in the corporate world at large and is not only restricted to Banks. Deep thinking is required vis a vis what is being doled out to such senior positions , This comment is not restricted to our Banks and other corporates (including the multinationals, where salaries also stink. This culture has further extended to the amounts being drawn by both civil and military beauracrats,which is further compiounded by the amounts drawn by the MNA and MPA. Here one is talking of all the benefits the beauracrats and polticians draw when in employment. This malaise is in other countries also, however , over here the gap between the high earners and low earners, keeps on increasing. So without taking any thing away from the Senior Bankers who are increasing earnings per share for their respective organisations, one needs to clamp down these salaries and benefits tors. 6 million per annum for the senior most posts and RS. 500,000 for the lowest ranks. Salim Beg

sputnik | 8 years ago | Reply ur comparing the banks of Pak with usa and india, r there banks involved in corruption scandals in collaboration with country politicians and scamster, bank profit ,credit does not go to entirely to CEO.in pak mostly due to security situation people put the money in banks instead of investing, and do the qualification of CEO is mpre than high tech.professionals like software experts,engineers,doctors and pilots which earn meager than CEOs

Fawad | 8 years ago | Reply This also shows top banks of Pakistan.

MiniInTheBox Coupons | 8 years ago | Reply Great post.

Fuzail | 8 years ago | Reply I agree with Neol. These Bank Presidents deserve to be paid a high salary because otherwise not-so-good bankers will accept the job and we might not be able to banks earnings huge profits. NBP is a public sector bank, but I admire the fact that a top professional was hired to run the huge organization and is doing pretty good.

Neol | 8 years ago | Reply CEOs is the brain of the organization. He thinks and foresees what others dont. Success has a price, and it is never overpriced. So, the best CEOs should get the best remuneration.

cultbuster | 8 years ago | Reply @Brainy Bhaijan: Agreed. CEOs must be fairly remunerated given the strategic direction they set and navigate the institution through challenging economical environment with focus on risk management. However we must also ponder upon the double digit growth in operating income posted by these banks. It reflects the large spread between deposits and lending rates. Are these banks treating their customers fairly?

Optimus | 8 years ago | Reply You may want to dig deeper in conducting your analysis. Total compensation received by the Presidents can be routed through subsidiaries/affiliates in which case it will not be included in the notes of the financial statements released by banks. The author should simply pose this question to the Investor Relations department of the Big 5 and you will see how the order of managerial compensation received becomes aligned with the size of the bank rather than how it is reported currently.

Muhammad | 8 years ago | Reply Hello Brainy. The market dynamics of Pakistan are different and so the salary structure. Is salary package of junior or middle level staff in Pakistan comparable with EU, IN or USA? A Teller at MCB or UBL gets 18000 a month which is even lower than what a driver gets in good organizations. The salary structure of Pakistani banks shows two extremes.

Brainy Bhaijan | 8 years ago | Reply The salary is peanuts compared to the amount of earnings per share, these people bring back to their shareholders. For example UBL made over $220 million profit in 2014, where as its CEO only took about $1 million as his compensation. That makes only 0.45% of the total profit, he made for the bank. If anything the CEOs in Pakistan are extremely underpaid compared to their counterparts in India, Europe and the good old USA.

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