NEW DELHI: As shareholders of several companies have rejected proposals of salary hikes for CEOs and directors recently, remuneration of top-tier managers at various firms has come under radar.
In a recent episode of shareholders' fight against company boards, shareholders of Eicher Motors, maker of Royal Enfield motorcycles, rejected a proposal to re-appoint Siddhartha Lal as its managing director with a remuneration package one-tenth larger than his current one.
While various CEOs and board members took pay cuts during the pandemic, a look at the annual reports of companies suggests many have seen their salaries rising amidst Covid-19, even as employees saw a hold on pay rise.
Rajesh Gopinathan, CEO of Tata Consultancy Services (TCS), who earned Rs 13.3 crore for FY20, saw his annual salary increase by 52% year-on-year to over Rs 20 crore in the last fiscal, according to the company's annual report for 2020-21.
The average increase in the managerial remuneration at the company for the last financial year was 55.22%, while the median percentage increase in remuneration of employees in the same year was 0.03%.
While CEO tenures have shortened, overall salaries are seeing a rise, says Vijay Sivaram, CEO, Quess IT Staffing. "Salaries are subject to the organisation DNAs from home-grown corporates, to founder/promoter-driven corporates, to listed entities. India Inc. is projecting 8-10% hikes and we expect CEOs to see a larger component of ESOPs and variables outlaid to them," says Sivaram.
IT major Mindtree's CEO Debashis Chatterjee's salary increased by 131% to Rs 11.3 crore during FY21, according to the company's annual report. The average hike for employees was 10% during the same financial year.
L&T Infotech (LTI) CEO Sanjay Jalona also saw over 29% increase in annual remuneration during the year. Sanjay Shetty, Director - Professional Search & Selection & Strategic Accounts, Randstad India, explains that a CEO's compensation has 'salary' as a smaller component with a big focus on long-term incentives (LTI), owner-promoter incentives, and other performance-based variable pay.
Saying that the median salary remains between Rs 10-15 crore and Rs 2-4 crore for public and private firms respectively, Shetty adds that many CEOs did give away a large part of their salaries to protect their employees from mass layoffs in impacted sectors.
"However, CEOs of businesses that flourished during the pandemic have witnessed an increment of about 10-12% this fiscal year," he further mentions, adding, "It is also interesting to note that many startups and small businesses have seen a whopping rise of 100% in CEO salaries this year primarily due to an increase in value stock options and other LTI incentives."
According to a recent Aon's Annual Executive Compensation Survey for India, top executives at Indian companies are likely to get a 6% salary increase in 2021.