₹ 146.19 crore. That’s how much Tech Mahindra paid CEO C.P. Gurnani in FY18
Tech Mahindra CEO C.P. Gurnani’s salary consists has a large component of stock options, which pegs his remuneration significantly higher than peers at TCS, Infosys and Wipro
Bengaluru: Tech Mahindra’s chief executive officer C.P. Gurnani earned ₹ 146.19 crore in remuneration in 2017-18, bringing his total earnings over the last five years to ₹510 crore. The numbers have rekindled debate among analysts and observers on compensation for the CEO of India’s fifth largest software services company and how it compares with the median salary of its other employees.
Significantly, Gurnani’s ₹510 crore in earnings is about 24% more than the combined earnings of ₹387.92 crore of nine CEOs at the four largest IT companies, including Tata Consultancy Services Ltd (TCS), Infosys Ltd, Wipro Ltd and HCL Technologies Ltd, over the last five years, according to a Mint analysis.
Tech Mahindra’s vice-chairman Vineet Nayyar who retires this year, earned ₹363.13 crore during this period, making the total payout by the company to two of its senior-most executives to ₹873.16 crore over the last five years.
Gurnani and Nayyar’s annual salary has a large component of stock options exercised during the last four years and for this reason, their compensation is higher than their peers.
Tech Mahindra defended the high compensation to its two executives, saying the grant of shares to Gurnani and Nayyar is tied to the company’s performance, with the company having clocked the fastest compound annual growth since 2013.
“The grant of shares for the executives including MD (managing director) & CEO is based on performance parameters and is decided by the Nomination and Remuneration committee, consisting of non-executive and independent directors,”said a spokeswoman for Tech Mahindra.
“If one looks at the last five years of growth, Tech Mahindra has been the fastest-growing company amongst the top five and the stock has been one of the best performers amongst peer group,” said the spokeswoman.
Although this is correct, Tech Mahindra’s performance—both revenue and profitability—is not significantly better than its four larger rivals.
Again, as Tech Mahindra is much smaller than TCS or Infosys, it is only expected of the firm to grow faster.
Sample this: Tech Mahindra reported a 9.6% dollar revenue growth to end with $4.77 billion in revenue in 2017-18 as against TCS’s 8.6% growth to end with $19.1 billion in revenue last year.
TCS’s $4.97 billion revenue in the January-March period is more than Tech Mahindra’s $4.77 billion sales for the entire year.
Still, TCS chief executive Rajesh Gopinathan earned ₹12.49 crore, as against Gurnani’s ₹146.19 crore last year.
Vishal Sikka, Infosys’s former US-based CEO, who faced criticism over higher salary from some of the software services company’s founders, earned ₹111.32 crore over three years.
“Capitalism is still trying to find a comfortable home in India and it is such instances of high, excessive compensation which in a democracy likes ours gives capitalism a bad name,” said Gurcharan Das, author and former chief executive officer of Procter & Gamble India.
“The fact is that flaunting wealth is distasteful and imprudent in our country. The last thing you want is the government to get involved in fixing salaries, but one should not forget that it is these examples of inequality that has partially contributed to leaders like Donald Trump getting elected in the US because it bothers a lot of people. The board of Tech Mahindra and Anand Mahindra (chairman of Tech Mahindra) should use self-restraint and make sure that there is no resentment among employees in Tech Mahindra,” Das said.
Gurnani, 59, joined Tech Mahindra in 2004, and took over as chief executive officer in August 2012.
Tech Mahindra, which was founded in 1986 and went public in 2006, allotted shares to Gurnani in 2006-07 and again in 2010-11.