TCS shareholders vent anger over CEO's high sal, press for bonus shares invoking Vishal Sikka's name
In the last fiscal, Chandrasekaran's salary increased 20 percent to Rs 25.6 crore while he also received an additional Rs 10 crore as a one-time special bonus
At a time when there is increasing scrutiny on how companies utilise their funds toward expansion and other miscellaneous purposes, shareholders, too, are becoming increasingly active, especially, when listed firms bypass dividend or bonus share announcements in the name of slowdown but don't hesitate to reward their chieftains through crazy salaries and perks.
This is exactly what had happened at the annual general meeting (AGM) of the country's largest software firm TCS, when shareholders raised a query over CEO N Chandrasekaran's payout for FY16, pointing towards the ratio of his salary to the median remuneration.
In the last fiscal, Chandrasekaran's salary increased 20 percent to Rs 25.6 crore while he also received an additional Rs 10 crore as a one-time special bonus. As a result, the CEO's compensation now stands at 459.84 times the median level at TCS, widening from 416 times in the previous year.
"We have imposed restrictions on age in this country. We should impose restrictions on income. This is not the Tata tradition. This is uneven distribution of income. You only see this in two IT companies in India - one in Bangalore, one in Mumbai," the Economic Times quoted the shareholder.
It didn't stop there. Another shareholder asked how it was possible to have such a large salary-to-median-ratio level, especially as shareholders have not been compensated, while a third asked why TCS was trying out these 'American practices' in a poor country, the ET report said.
Chairman Cyrus Mistry fielding questions on CEO's compensation brushed aside concerns saying, "The board is totally cognisant of the benchmark salary structure within the industry and has applied those. We think we have applied them appropriately."
In comparison to Chandrasekaran's package, Infosys CEO Vishal Sikka earned about Rs 49 crore in the last financial year and his pay was 935 times the median remuneration of employees.
Several shareholders also asked for issuance of bonus shares while referring to the low amount of capital funds compared to the cash balances and reminding the management about the approaching golden jubilee (50th year) of the firm.
In fact, one of the shareholder even invoked the name of rival Infosys' Chief Executive and asked for a few "sikkas" (meaning coins) from the company in the form of bonus shares. Mistry said smilingly the board will consider such suggestions.
The over $110 billion, salt-to-software Tata Group derives over half of its revenues from outside India.
Amid worries about volatile financial markets, the Tata group Chairman also expressed hope that the rupee will remain stable on the back of the country's improving macroeconomic fundamentals.
"Indian economy is doing well and our current account balances are well. At least, I look forward to a stable rupee going into the future. We can't say exactly what will happen," he said.
He also acknowledged that there is a "lot of volatility" in the world and Tata Sons' largest company by profits, TCS, has multiple income streams spread across geographies and verticals to take care of the same.
Calling 'Brexit' -- exit of Britain from EU -- as an "important" question, Mistry declined to answer specifically about its impact. A referendum is due this month in the UK to decide whether Britain stays in the European Union or not.
Mistry further said he does not see any impact on the company's operations in Tamil Nadu as a result of the state government's decision to allow IT employees to unionise.
On the $940 million claim by US-based Epic Systems alleging theft of trade secrets, Mr Mistry said TCS believes it has not misused any intellectual property of the American firm and is currently awaiting a judgement.
Replying to a question on the lower provision despite the suit, Mistry said, "In the opinion of the company's legal counsel, the jury award is not binding, and it's currently assessed on the low possibility of the event."
He sees the UK-based Diligenta, TCS' bet to expand in the insurance business, as having a good future from the long term perspective.
With agency inputs