Professional CEOs got better raises than promoters last year
Companies have evidently learned the art of rewarding hardworking ‘C’ suite executives: they received better increments last fiscal than even promoters.Updated: Sep 12, 2016 11:26 IST
Companies have evidently learned the art of rewarding hardworking ‘C’ suite executives: they received better increments last fiscal than even promoters. The highest paid executive among listed companies in BSE was Vineet Nayyar of HCL Tech, who took home ₹179.5 crore in 2015-16 — more than double the Rs 71.5 crore that highest paid promoter executive, Sun Group’s Kalanithi Maran, made in the same year.
Among prominent professional executives, the salary of L&T group chairman AM Naik more than doubled to Rs 66 crore in 2015-16 from Rs 27 crore, while Aurobindo Pharma MD N Govindarajan got a 166% salary hike to Rs 49 crore.
The story of promoter executives was relatively flat. Pawan Munjal, the CMD & CEO of Hero Motocorp, and joint MD Sunil Kant Munjal got 28% pay hikes at Rs 57.4 crore and Rs 54.4 crore respectively. The story was even blander for their peers: Bajaj Auto MD Rajiv Bajaj, for instance, got a 9% hike, while Bharti Airtel’s Sunil Bharti Mittal took just 2.5%.
“The business environment is becoming complex. The professional executives are in demand, either due to increasing global reach of business or — in many cases – because there are too many people in the next generation of the family,” said Amit Tandon, managing director, Institutional Investor Advisory Service (IiAS). “Professionals in turn are demanding higher salaries. Employee Stock Option (ESOP) is the major component behind the rise in compensation for professional executives as their salaries are aligned with performance (shareholder returns) they generate.”
Few years ago, there was criticism of some promoter-CEOs taking home very high salaries. Many promoters then took a pay cut, and promoter-run firms started rewarding professional executives more.
For instance, Mukesh Ambani reduced his pay from ₹44 crore to ₹15 crore (he has been taking a fixed salary of ₹15 crore since then) eight years ago.
Navin Jindal has taken several pay cuts in the last few years. His salary of Rs 73.4 crore in 2011-12 has come down to Rs 13.7 core in 2015-16.
Industry experts say this trend reverse in the near future. “Promoter’s compensation is a symbol of power. They will continue to get high salaries,” said Kamal Karanth, MD at US-based staffing firm, Kelly Services.