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Business News/ Companies / Wipro triples board compensation, biggest rise among top 10 firms
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Wipro triples board compensation, biggest rise among top 10 firms

The total compensation for the 10 companies rises 30.5% over the preceeding year

Among firms paying the lowest board compensation were HDFC Bank Ltd and ICICI Bank Ltd. Photo: MintPremium
Among firms paying the lowest board compensation were HDFC Bank Ltd and ICICI Bank Ltd. Photo: Mint

Mumbai: Wipro Ltd saw the highest increase in compensation of non-executive directors in the year ended 31 March among India’s top 10 companies by market value.

The total compensation for these 10 companies rose 30.5% over the preceeding year.

Wipro, the tenth largest company by market value as on 8 August, almost tripled the compensation of its non-executive directors, while Hindustan Unilever Ltd (HUL), the eighth largest, more than doubled its.

The increase at these two companies can be attributed to the higher commissionpaid to some of their non-executive directors, besides the appointment of additional directors.

Non-executive directors on Indian company boards are usually entitled to remuneration under two heads, sitting fees and commission.

Wipro’s board members earned a total of 5.3 crore in 2013-14; HUL’s board earned 1.25 crore during the year.

Wipro declined comment, and HUL did not respond to questions sent on Friday.

“Board compensation has been dismal for the longest time in India, and only now there is a trend of increasing compensation, given the increase in responsibility of the directors and the need for better governed boards," said Nishchae Suri, partner and head of people and change, KPMG, a consultancy.

Directors in India were paid 5,000 per sitting in the early nineties, which was increased to 20,000 in 2003. It has not changed since then.

The new companies law has raised the upper limit of sitting fee—paid to the members to attend board meetings—to 1 lakh per member per meeting. However, the law also makes independent directors criminally liable for the board’s lapses.

“This increase in responsibilities of directors justifies the increase in the rise of sitting fee that can be paid to board members," says Mehul Shah, associate partner, Khaitan and Co., a law firm.

Tata Consultancy Services Ltd (TCS), India’s largest company by market value, continues to lead the crop of companies in terms of absolute compensation awarded to its board at 17 crore. Its peer, Infosys Ltd, posted the lowest increase of 4% to 8 crore among the top 10.

“Board compensation is benchmarked more with the profits earned by the company rather than its peers," explains Anandorup Ghose, rewards consulting practice leader, Aon Hewitt India.

The payments of all these companies are well below the Companies Act mandate that board compensation should not exceed 1% of the net profit earned by the company.

Globally, companies compensate their board members $300,000-400,000 each ( 1.8- 2.5 crore), and about 50% of that is through stocks, said Ghose.

Among firms paying the lowest board compensation were HDFC Bank Ltd and ICICI Bank Ltd.

The non-executive directors on the boards of the two companies were paid only sitting fees and were not awarded commission, as RBI norms prevent banks from giving commission to board members.

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Published: 12 Aug 2014, 12:29 AM IST
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