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1. CEO Remuneration 2022 Report: CEOs in a Post Covid Era - What Matters Most
2. Executive Summary - CEO Remuneration 2022: CEOs in a Post COVID Era - What Matters Most

How Industries Shape Executive Compensation – CEO Remuneration Across Sectors; The Good, Better, Best

This section seeks to provide a succinct overview of the relationship between the performances of various industries within the Nigerian economy for the year 2021, and the remunerations received by the Chief Executive Officers (CEO) of the listed companies underneath each sector. 

The 2020 CEO remuneration edition was pointedly characterized as a period of pandemic where most companies had to go hybrid to continue operations.  Most companies recorded a decline in performance, but the fall had little or no impact on the earnings of their executives, indicating that a significant decline in the earnings of the company did not translate to a fall in CEO remuneration but instead the highest-paid executive experienced an increase in remuneration.

With 2021 being a recovery year, most industries were finally able to sustain stable levels of growth, but it would also be disingenuous to provide an overview without highlighting various pivotal occurrences that shaped these growth levels. The recovery in crude oil prices, specific sectors suspended the hybrid work nature and returned to physical business operation and the innovation of new business lines promoted by the covid pandemic bolstered the growth. However, the growth recorded during this period translated to the remuneration of some CEOs.  

In line with the recovery, several managerial changes were made by most companies, and as such CEOs either retired or were replaced, more often than not leading to a reduction in amounts earned. The various amounts paid as remuneration were sourced from each company’s annual audited report for the financial year 2021.  Each company has different yardsticks or guidelines employed in determining the pay CEOs receive. However, in line with this year’s theme, the CEO remuneration will be captured using the base remuneration entitled to the executive and method of payment namely, stock bonuses, and benefits, and its effect on the industry under which the company exists. 

Firstly, base remuneration particularly that of the CEOs is based on a myriad of factors such as years of experience, location of the company, and level of superiority, but notably, the industry plays an important role, particularly in cases where the company is part of an extremely competitive and booming industry, more often than not, high-performance levels are recorded and as such leading to higher levels of pay. Moreover, base remuneration also serves as an acute form of reward in cases where the executives provide stellar leadership that reflects heavily on the performance of the company and as such, ideally, higher levels of base pay correlate significantly with company earnings.

Secondly, CEOs are offered hefty bonuses/benefits that serve as a means of incentive, and as such this varies with the overall performance annually. It serves as a valid form of compensation, particularly in scenarios where the company has immediate objectives or goals that have to be achieved within a short period.  

Thirdly, the stock options posit a situation where the CEO is offered several shares within the company and thus at the end of the year, is entitled to such dividends per each share owned, thus adding to the overall payment received.

In conclusion, in an ideal situation, the industry in which a company exists should primarily shape the remuneration received by the CEOs such that it reflects the level of competitiveness and present boom/decline being experienced in the industry.