Mukesh Ambani praised for pay cut
India's richest man, Mukesh Ambani, has won government praise for taking a 66 per cent pay cut, after a minister called for "vulgar" executive salaries to be curbed, a report said. "What Mukesh has done is laudable," Corporate Affairs Minister Salman Khurshid said.business Updated: Oct 19, 2009 13:08 IST
India's richest man, Mukesh Ambani, has won government praise for taking a 66 per cent pay cut, after a minister called for "vulgar" executive salaries to be curbed, a report said on Saturday.
The decision by the Reliance Industries Limited (RIL) chief to accept a lower remuneration package showed "remarkable sensibility to the prevailing thought process" in India, Corporate Affairs Minister Salman Khurshid said.
"What Mukesh Ambani has done is laudable," Khurshid was quoted by the Press Trust of India as saying on Friday.
The two-thirds cut means Ambani will now receive 150 million rupees a year (3.2 million dollars) in wages, along with a share of the profits of RIL, the country's biggest private sector company.
Before the announcement, Ambani would have taken home 440 million rupees.
Khurshid has sparked debate in India by urging companies to avoid "vulgar" salaries for top earners, as the government pursues its own austerity drive, with ministers flying economy class in order to trim a rising deficit.
His call to rein in executive pay comes amid pressure from governments around the world for companies to clamp down on remuneration in the wake of the global financial crisis.
Mukesh Ambani is the world's seventh richest man, according to the 2009 Forbes list, with an estimated net worth of 19.5 billion dollars.
RIL, which has interests ranging from petrochemicals to retail, said the cut reflected Ambani's "desire to set a personal example of moderation in executive compensation".
The cut "is about internal auditors, about shareholders, about disclosures and accountability," said Khurshid. "But taking a cut in remuneration is the most visible issue as far as the public is concerned."
Indian executive pay slips are often much lower than those of their Western counterparts and the country has not suffered as much as many others in the financial crisis.
But the government has been keen to restrain executive salaries in the light of huge income disparities in Asia's third-largest economy.
Last month Mukesh's younger brother Anil, with whom he is locked in a bitter dispute sparked by a 2005 pact carving up the family conglomerate, said he would not take any wages from his group firms, Indian media reported.
Anil Ambani is ranked far lower on the Forbes list, which estimates his assets at 10.1 million dollars.