Executive Reward Structure and Financial Performance of Listed Companies in the Nairobi Securities Exchange, Kenya


  • Dennis Joseph Nzunga Kenyatta University
  • Dr. Jeremiah Koori Kenyatta University
  • Dr. Caroline Kimutai Kenyatta University




Studies have reported positive and significant relationship,that is, positive relationship between executive fixed pay, cash bonus, stock options and company’s financial performance; others negative and significant relationship, while others no significant relationship. In view of this, the study sought to establish the relationship between executive reward structure and financial performance of listed companies at the Nairobi SecuritiesExchange, Kenya. The investigation's precise goals were to establish the impact of executive base pay, bonuses, and non-cash incentives, as well as executive stock options, on the financial performance of firms listed on the Nairobi Securities Exchangem in Kenya.The research also determined if the rate of inflation had a moderating influence on the association between CEO compensation and financial performance of Nairobi securities exchange-listed businesses. Stakeholder theory, agency theory, marginal productivity theory, and managerial power and governance theory were all used in this research. In this study, the positivist philosophy was applied, as well as a causal research design. The target population was all 65 listed businesses on the Nairobi Securities Exchange in Kenya, and a census was conducted. The research employed panel secondary data from annual financial statements of NSE-listed businesses. The study finding indicated that all the study variables except for inflation had a positive correlation with with financial performance of listed firms. However it is basic pay, bonuses and non cash benefits that had a positive and significant effect on the financial performance of listed firms. The effect of executive share options was positive but insignificant at 5% level of significance. Equally the effect of inflation was negative but insignificant. However, inflation has a signinificant effect as a moderator in the relationship between executive rewards and financial performance of listed firms at the Nairobi SecuritiesExchange.Its is on the basis on of this findings that the study recommends that listed firms need to tailor their executive compensation and reward schemes to performance to encourage the top executives to continuous work hard and achieve their performance targets.

Keywords: Executive reward structure, executive basic salary, executive bonuses, executive non-cash benefits, executive stock options, inflation rate, financial performance. 

Author Biographies

Dennis Joseph Nzunga, Kenyatta University

Masters Student

Dr. Jeremiah Koori , Kenyatta University

Lecturer, Department of Accounting and Finance

Dr. Caroline Kimutai, Kenyatta University

Lecturer, Department of Accounting and Finance


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How to Cite

Nzunga, D. J. ., Koori , J. ., & Kimutai, C. . (2022). Executive Reward Structure and Financial Performance of Listed Companies in the Nairobi Securities Exchange, Kenya. Journal of Finance and Accounting, 6(3), 21–39. https://doi.org/10.53819/81018102t4057