Mumbai: India’s stock markets are falling, its economy is slowing, investor sentiment is down and the corporate outlook gloomy but, the pay packets of the top brass at many listed companies have gone in one direction: up.
The 10 highest compensated corporate executives in Indian listed firms received an average 64% pay hike in the financial year through March, compared with the previous year. While 2007-08 was a good year for Indian firms and stock markets, the hikes are well above the average growth in net profit and share prices of these firms during that period, which was under 40%.
Mint examined salaries of directors of those listed Indian firms, including chief executives, based on annual reports that are currently available for companies for 2007-08. (Compensation packages of 100 Indian business leaders have been specially compiled for Mint readers. Access this on www.livemint.com/compensation.htm)
The study excludes firms that haven’t yet reported the data and this means several key chieftains, whose 2007-08 compensation levels could significantly alter this analysis, are not included though experts say it is unlikely to alter the overall trends of handsome increases in rewards for 2007-08 performance.
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For example, the compensation details of Anil Ambani, the second richest individual in India, couldn’t be ascertained as his flagship firms are yet to publish their annual reports. Similarly, the likes of Anand Mahindra, vice-chairman and managing director of auto maker Mahindra and Mahindra Ltd, and Adi Godrej, chairman and managing director of Godrej Consumer Products Ltd, are not part of this analysis.
Compensation includes basic pay, perquisites and other allowances, and commissions or performance-linked bonuses.
India’s richest individual, Mukesh Ambani, also continues to be the highest paid chief executive at the helm of Reliance Industries Ltd, the country’s largest private firm by market value.
The elder of the Ambani brothers got 125% more compensation than the second highest paid CEO in India, Ranbaxy Laboratories Ltd’s Malvinder Mohan Singh, who in June sold his shareholding in India’s largest drug maker by sales to Japan’s Daiichi Sankyo Co. Ltd.
Ambani cost Reliance Rs44 crore during fiscal 2008, up 44% from his previous year’s compensation of Rs30.46 crore. Singh, on the other hand, got Rs19.59 crore, almost 200% higher than what he had got in 2007.
Reliance Industry’s net profit in fiscal 2008 rose 25.22% but, its market value soared 65% in a year when India’s benchmark equities index, Sensex, rose less than 20%. In Ranbaxy’s case, net profit rose 52% even though Ranbaxy’s market value climbed a more modest 24.43%.
India’s third highest compensated chieftain is Sunil Bharti Mittal of Bharti Airtel Ltd, which operates retail and financial services business, besides its flagship, one of the largest telecommunications networks in India.
Mittal’s compensation package went up 30% to Rs19.55 crore, even as Bharti’s stock saw a meagre 8.2% growth in the year to March.
Mittal, who recently stepped down as the head of industry body the Confederation of Indian Industry, or CII, had said last year that CEO salaries “cannot be legislated” after Prime Minister Manmohan Singh in May 2007 used a CII meeting to suggest salaries of top executives in India should be pulled back since the rising numbers could provoke a general backlash.
Sajjan Jindal of JSW Steel Ltd and Onkar S. Kanwar of Apollo Tyres Ltd rank fourth and fifth highest compensated executives, respectively. The former got Rs16.7 crore and the latter Rs15.5 crore, over previous year packages of Rs13.25 crore and Rs9.98 crore, respectively, a rise of 26.28% and 55.76% each.
Pankaj R. Patel of Cadila Healthcare Ltd, was next with a package of Rs14.4 crore, a rise of 16.09% over the previous financial year, even as his company’s share prices dropped 24% in that year and net profit rose 15.88%, the lowest among the Top 10 firms in terms of what they paid their top executive.
The list of other chief executives in the Top 10 includes Kumar Mangalam Birla of Grasim Industries Ltd, the two Meswani brothers—Nikhil R. Meswani and Hital R. Meswani—who are on the executive board of Reliance Industries, and Kamal K. Singh of technology services firm Rolta India Ltd.
A 15 June analysis by Associated Press that looked at compensation for the heads of companies in global rating agency Standard and Poor’s 500 index found the median pay package added up to nearly $8.4 million (around Rs36 crore) in 2007—a gain of about $280,000 from 2006.
But, the overall increase amounted to only 3.5% even though the absolute numbers tend to be significantly more than those received by most Indian CEOs.
Meanwhile, it hasn’t all been surges across the board. There are chieftains who have also taken a cut.
For instance, K. Anji Reddy, chairman of Dr Reddy’s Laboratories Ltd, the largest research-oriented drug maker in India, has seen a 54% erosion in his package, from Rs14.4 crore in 2006-07 to Rs6.62 crore. The firm’s managing director and chief operating officer, Satish Reddy, and vice-chairman and CEO, G.V. Prasad, also got reduced packages. Their compensation came down from Rs10.87 crore to Rs4.95 crore. The company’s net profit was down 60% while stock value shrank some 19% in that year.
Plethico Pharmaceuticals Ltd’s chairman and managing director Shashikant Patel tops the list of executives who saw the biggest rise in salary last year. Patel’s annual remuneration of Rs4.2 crore in the year to March was 314% more than Rs1 crore that he took home in the previous fiscal.
The three Pandas of Indian Metals and Ferro Alloys Ltd—B. Panda, Subhrakant Panda and Baijayant Panda—chairman, managing director and vice-chairman, respectively, took home Rs4 crore each, 200% more than what they got in fiscal 2007.
Markand Bhatt and Sudhir Mehta of Torrent Power Ltd and Patni Computer System Ltd’s Gajendra K. Patni and Ashok K. Patni, also saw some 200% increases in their remuneration. While the Patni brothers’ packages were Rs6 crore each, the Torrent executives were paid Rs5 crore each.
C.S. Nopany, chairman and managing director of Oudh Sugar Mills Ltd, Shree Renuka Sugars Ltd’s Narendra M. Murkumbi and Vidya M. Murkumbi, and Prism Cement Ltd’s Manoj Chhabra are among the lowest paid top executives for companies where data is available.
The club of modestly paid executives also includes Asian Paint Ltd’s managing director Ashwin Dani, Pfizer Ltd’s Kewal Handa, and Atlas Copco (India) Ltd’s M.M. Mustapha. All were paid less than Rs2 crore in 2007-08.
AP contributed to this story.