New Delhi: The country’s top drugmaker, Ranbaxy, has proposed an annual pay package of Rs6 crore for its new CEO and MD Atul Sobti, but his remuneration would be less than one-third of the same for his predecessor Malvinder Mohan Singh.
Incidentally, Singh’s remuneration was in excess of the prescribed regulatory limits and Ranbaxy is waiting for the shareholders’ nod to seek the waiver of relevant norms from the central government.
Singh was paid in excess of Rs9 crore and a host of other benefits for a period of little over five months during which he held the positions of chairman, CEO and managing director at Ranbaxy -- giving an average payout of about Rs2 crore a month.
After holding the office of CEO and MD for about three years, Singh was elevated to the position of chairman, CEO and MD of Ranbaxy for a period of five years on 19 December 2008.
However, he resigned from these positions on 24 May 2009 and Atul Sobti was appointed as CEO and MD for a period of three years with effect from the same date.
Ranbaxy was promoted by Singh and his family before they sold their holding to Japanese drugmaker Daiichi Sankyo last year. At the time of announcement of the deal in June 2008, it was decided that Malvinder Singh would continue as CEO and MD and would also assume the position of chairman after the closure of the deal.
While disclosing the remuneration paid to Singh, Ranbaxy has proposed an annual package of Rs 6 crore and other benefits for Sobti during his tenure.
The remuneration packages for both Sobti -- for three years as CEO and MD with effect from 24 May 2009 -- and Singh -- from the date of his elevation to Chairman, CEO and MD till his resignation -- are yet to be ratified by Ranbaxy’s shareholders, who have been now asked to communicate their approval or dissent by 14 September.
The company has also proposed that Sobti would be paid this remuneration notwithstanding the absence or inadequacy of profits in any accounting year, but his total remuneration, including salary, allowances, perquisites and commission would not exceed the government-prescribed limits.
Sobti’s remuneration would include a salary of up to Rs1.5 crore per annum and various allowances and perquisites with their aggregate value capped at Rs4.5 crore.
In addition, he would be entitled to company-maintained cars with drivers, telephones and fact at residence, company’s contribution to provident fund and superannuation fund, gratuity and other retiral benefits and leave encashment.
Besides, he would also get commission equivalent to an amount to be divided by the board each year.
In comparison, the company has disclosed that Singh was paid a remuneration of Rs9.15 crore for the period from 19 December 2008 to 24 May 2009, excluding a host of other benefits.
During this period, he was paid a salary of over Rs7.35 crore as also allowances and perquisites totalling more than Rs1.78 crore.
In addition, he also received benefits like three company-maintained cars with drivers, facilities like telephone, fax, computers, laptops, video-conference facility, Internet and board band at residence, mobile phones and hand-held email devices, company’s contribution to provident fund and superannuation fund, payment of gratuity and other retiral benefits and leave encashment.
Ranbaxy has also sought shareholders’ nod for “seeking approval of the Central Government for waiver of excess remuneration paid to Malvinder Mohan Singh for the period from 19 December 2008 to 31 December 2008.”
In view of the losses incurred in the year ended 31 December 2008, the company had sought and received the central government’s approal for the payment of remuneration to Singh as CEO and MD in excess of the specified limits for the period from 1 January 2008 to 18 December 2008.
“For the period from 19 December 2008 to 31 December 2008 (the period in the accounting year 2008 during which Singh served as Chairman, CEO & MD), approval of the central government would be sought after the approval of the resolution by the shareholders,” Ranbaxy has said in a notice to its investors.