Tata Sons hires HR firm to seek opinion on N Chandra's salary; here's a list of CEOs whose pay packages made headlines
N Chandrasekaran was appointed Tata Sons chairman on 21 February 2017, nearly four months after Cyrus Mistry was sacked
Tata Sons has roped in an international human resources firm to seek its opinion on a salary hike to be given to present chairman N Chandrasekaran, who completes a year in office. He took over as chairman in the salt-to-steel conglomerate on 21 February 2017.
Chandra, as he is popularly known in corporate circles, was the CEO and MD of Tata Consultancy Services (TCS) for more than seven years. According to a Tata Sons annual report, the annual salary raise as chairman of the group will come into effect on 1 April, 2018.
The nomination and remuneration committee (NRC) of the $104 billion Tata group will take a call on Chandra's salary hike after the foreign company has given its opinion on the same, according to a report in Business Standard.
Chandra joined Tata Sons on a lesser salary than what he was earning as the head of TCS. He earned a remuneration of Rs 21.28 crore making him probably the highest paid executive in the Tata group. In comparison, Chandra's current annual salary as chairman of Tata Sons is a paltry Rs 2.4 crore. Apart from the salary, he is also entitled to get 200 percent of his basic salary as variable remuneration, the BS report added. After he gets the hike, his salary will go up to Rs 4.8 crore, which is still way lower than what he earned at TCS.
Chandra's salary, however, is much lesser than what his predecessor, Cyrus Mistry -- who was sacked as chairman of Tata Sons in October 2016 -- received which was a whopping Rs 16.25 crore in FY 2014-15, according to this Economic Times report. Perhaps Mistry would have drawn an even higher salary as the NRC was mulling giving him a hike months before he was removed from Tata Sons, the BS report said.
Like the yawning gap between Chandra and Mistry's salaries, other CEOs in blue-chip Indian firms too have received much lesser than their predecessors. For instance, the much-discussed salary of Vishal Sikka, the former CEO of Infosys. This was brought into the public sphere by co-founder NR Narayana Murthy.
Sikka, who had joined Infosys as the company's first non-founder CEO in June 2014, took home a whopping Rs 73.4 crore or $11 million as salary. Sikka had earned around Rs 42.92 crore ($6.75 million) in FY 2016-17, a sore point with Murthy, PTI reported.
Besides Sikka's salary, the then Infosys board also earned the ire of Murthy for the hefty severance package given to former chief financial officer Rajiv Bansal who had quit the company in 2015. It was widely reported that Bansal was awarded more than Rs 17 crore as exit pay which did not go down well with other co-founders besides Murthy who had hinted that it could have been "hush money". Murthy had at one point even went on to suggest that highest-paid individuals in organisations should get a salary cut to bridge the huge gap between salaries of top executives and lower rung employees.
The duel between Infosys co-founders and management of Infosys finally led to Sikka putting in his papers in August 2017 after a stint of three years.
Salil Parekh who followed Sikka as chairman is reported to be getting a fixed salary of Rs 6.5 crore, much lower than what Sikka got. Parekh will also be entitled to receive a variable pay of Rs 9.75 crore at the end of FY 2018-2019, PTI had said quoting a top company executive.
“Infosys CEO Salil Parekh will be paid a fixed salary of Rs 6.5 crore. He would be eligible for variable pay of Rs 9.75 crore at the end of the fiscal year,” independent board member at Infosys Kiran Mazumdar Shaw told PTI.
Though Murthy belongs to an era in Infosys where frugality was celebrated and where founders took turns to be at the helm and hence took much lesser salaries than their counterparts, corporate India is replete with examples of CEOs who get higher salaries than the founders or promoters of the companies. Like Anand Mahindra, chairman of the Mahindra Group.
According to the ET report cited above, Mahindra is not the highest paid person in the group. Instead, Pawan Goenka who was made executive director of the company in September 2013 took home Rs 10.37 crore, an astronomical 73 percent more than what Mahindra was earning as promoter of the group for 2014-15. Similarly, Britannia CEO Varun Berry's salary of Rs 4.71 crore is more than Nusli Wadia's remuneration of Rs 3.68 crore in FY16.
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On January 12, the TCS chief was named as the Chairman of Tata Sons, capping two months of the most bitter boardroom battle in the corporate history that followed the unceremonious sacking of Cyrus Mistry and letting of bad blood ever since.
The Tata group and Mistry are currently fighting it out in the court after last year's bitter board room battle in which the latter was removed from the top post of the over $100-billion salt-to-software conglomerate.
Tata Group says there has never been any requirement for getting Tata Sons listed to generate any income for Tata Trusts