- Nigeria’s Corporate Governance Remuneration Structure Weak
The corporate governance principles of Nigeria have not provided a remuneration structure for directors of companies, a recent report has shown.
A study by the Association of Chartered Certified Accountants and KPMG on the corporate governance of 15 African countries showed that there was no linkage between the performance and remuneration of company directors.
Speaking at a press conference to unveil the report in Lagos, the Partner and Head of Board Advisory Services, KPMG in Nigeria, Tomi Adepoju, said it was discovered that the standards of corporate governance code across several African countries were aligned with the Organisation for Economic Co-operation and Development Principles of Corporate Governance.
However, findings from the report showed the ability of companies to recoup directors’ remuneration in the event of negligence or fraud was one of the common elements of the OECD-related principles that were not found in Nigeria and other African countries.
Nigeria was also found among the markets that specifically disallowed performance-related payments for non-executive directors together with Mauritius, South Africa, Egypt and Ghana in the report entitled: ‘Balancing rules and flexibility for growth’.
Adepoju said, “We also noted that certain elements of the OECD principles were not featured in a number of markets, including Nigeria. This relates to requirements to allow shareholders to consult each other on issues on their basic rights.
“We all know that in Nigeria, there were instances where companies went under or there were large frauds. In other markets, they go after the director involved and the director has to pay back all the fees he or she has collected. This is not really embedded in a number of codes from Africa. We didn’t see much in terms of allowing performance enhancing mechanisms for employee participation.”
Speaking about the findings in relation to Africa’s development, the Head of Policy, Sub-Saharan Africa, ACCA, Jane Ohadike, said more awareness and efforts would be needed to strengthen remaining critical areas of corporate governance, particularly for remuneration structures, performance evaluation, risk governance, and board composition and diversity.
According to her, most markets mandate the basic corporate governance requirements such as financial disclosure, shareholders’ rights and the role of the board, supplementing these with non-mandatory guidelines for good practice.
Ohadike explained, “Achieving the right balance between rules and flexibility is a tricky task for any country, but of fundamental importance for those where corporate governance is critical to support robust economic growth.
“Although decisions about how to shape a corporate governance framework and how fast to do so may be unique to each market, and there is no ‘one-size-fits-all’, there is value in continuing to compare and incorporate internationally accepted standards of corporate governance.”
“We hope this study can contribute to raising the standard of corporate governance requirements across Africa,” Adepoju stressed.
