11th year in a row, the pay for richest Indian remains the same, with no hike at all. Reliance Industries Limited in its latest annual report revealed, “Compensation of Mukesh D Ambani, Chairman and Managing Director, has been set at Rs 15 crore, reflecting his desire to continue to set a personal example for moderation in managerial compensation levels.”
In 2018-19 his salary included Rs 4.45 crore as salary and allowances, which is marginally lower than Rs 4.49 crore he got in the previous 2017-18 fiscal. Further, while his commission has remained unchanged at Rs 9.53 crore, perquisites have risen to Rs 31 lakh from Rs 27 lakh and the retirement benefits stood at Rs 71 lakh.
Back in October 2009, when the debate over right-sizing of CEO salaries was going on, Ambani had voluntarily chosen to cap his compensation. Ever since then his salary has been the same, while other executive directors of the firm have received pay hikes.
Salaries of Nikhil R Meswani and Hital R Meswani rose to Rs 20.57 crore each. They earned Rs 19.99 crore each in 2017-18 and Rs 16.58 crore in 2016-17. In 2015-16, Nikhil got Rs 14.42 crore, while Hital took home Rs 14.41 crore. In 2014-15, they got Rs 12.03 crore each.
Then, another executive Director, P. M. S. Prasad’s remuneration went up to Rs 10.01 crore from Rs 8.99 crore in the previous year. His salary has increased steadily,from Rs 6.03 crore in 2014-15, to Rs 7.23 crore in the next fiscal and to Rs 7.87 crore in 2016-17.
Besides executive directors, there are non executive directors, including Nita Ambani, who received Rs 1.65 crore each as commission, besides sitting fees. The commision for non executive directors has also risen from Rs 1.5 crore in 2017-18 and Rs 1.3 crore in the previous year.
The performance criteria for two executive directors, entitled for Performance Linked Incentive (PLI), are determined by the Human Resources, Nomination and Remuneration Committee, mentioned the annual report.
The size of CEOs Salary: An ongoing debate
Many claim that CEOs receive skyhigh salaries and protest over pay inequality across various tiers at mega corporation. Particularly CEOs in the US and India earn the most compared with average workers. As per a ranking by Bloomberg, in 2017, the chief executives of companies listed in India’s Sensex Index earned 229 times more than the average worker in the country.
The heated debates over high CEO compensation versus what the average worker earns in the company still continues.
Amidst the debate on oversized pay of CEOs, many recommendations and opinions have also emerged over the years. For instance, Harvard Business Review, two London Business School professors say the real focus shouldn't just be on the size of CEO pay, but on how it's structured. There are many who believe CEO salary should be linked to profits.
There are some leaders like Mukesh Ambani and Sundar Pichai, who are trying to do their bit by not taking massive year on year hikes on their salary and trying to send a message. Last year, O S Kanwar and Neeraj Kanwar, the promoters at Apollo Tyres agreed to take a 30 percent cut in their compensation for 2018-19.
But is capping compensation and not accepting hike the best solution to the problem? Or is there a more robust method which can be easily adopted by companies across the country?