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    Million-dollar CEO club swells with record 22 new entrants in FY19


    According to the annual study of CEO/CXO compensation in BSE 200 companies by EMA Partners, commissioned by TOI, the overall pay of the million dollar CEO club increased 14% to Rs 2,457 crore from last year’s Rs 2,158 crore, with the average CEO package at Rs 16.8 crore.

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    (This story originally appeared in on Dec 11, 2019)
    MUMBAI: The economy may be slowing down, but not the entry into the ‘million dollar CEO club’, which saw a record 22 new members in FY19.

    The number of CEOs earning a million-dollar (Rs 7 crore) salary annually surged to 146 from 124 in the previous year — an 18% jump. This is by far the best fiscal for the elite club in the last four years despite the falling rupee. The club with 119 members in FY16 had seen a marginal membership growth till FY18.

    According to the annual study of CEO/CXO compensation in BSE 200 companies by EMA Partners, commissioned by TOI, the overall pay of the million dollar CEO club increased 14% to Rs 2,457 crore from last year’s Rs 2,158 crore, with the average CEO package at Rs 16.8 crore. For the study this year, the value of the rupee to the US dollar was taken at Rs 70. In the previous year, the threshold to the club was Rs 6.5 crore (the rupee to the dollar was pegged at Rs 65). So the cut-off in annual compensation — Rs 7 crore — required to figure in the elite million dollar CEO club got tougher this year.


    The club features prominent promoter and professional CEOs such as Sun Group chairman Kalanithi Maran, who leads the group with a compensation of about Rs 88 crore, Hero MotoCorp CMD Pawan Munjal (Rs 80 crore), JSW Steel chairman Sajjan Jindal (Rs 69 crore), Larsen & Toubro CEO & MD S N Subrahmanyan (Rs 27 crore), Indiabulls Housing Finance VC & MD Gagan Banga (Rs 16 crore), CMD Suresh Narayanan (Rs 11 crore), MD & CEO Saugata Gupta (Rs 9 crore), among othersAmong the new entrants to the club, Infosys CEO Salil Parekh received the biggest jump of over 300% in compensation to Rs 17 crore in 2018-19, from about Rs 4 crore in the previous fiscal.

    Professional CEOs (85 of them) have clearly outpaced promoter CEOs (61), and this gap has only widened over the years. “Hiring a good CEO in India just got tougher as India Inc sees more exit barriers in place now in the form of short-term and long-term compensation,” said EMA Partners regional managing partner (Asia) K Sudarshan. He added that the numbers have risen in line with the deepening market.

    Although the economy is facing a slowdown, Sudarshan said its effects will be more visible in terms of bonuses and commissions payable to CEOs. In any case, these are numbers for FY19, and the real impact of a slowdown will be seen in CEO salaries of FY20. Over the last few years, CEO salaries have come up for criticism in certain sections of society. Some leaders of India Inc have seen their annual compensations remain unchanged this year, such as the Marans, while for others it has come down, like in the case of Onkar Kanwar of Apollo Tyres. However, experts believe with growing demands on CEOs, the salary paid to the occupants of the corner office is justified.

    Nestle India CMD Suresh Narayanan, who is credited with bringing Maggi out of the crisis it faced a few years ago, said he does not entirely work for the salary that he earns. “It’s not that this (compensation) is going to influence the way in which I contribute. When you reach the level of a CEO, there are other reasons that inspire you to work. To me, pay has to reflect the skills to manage the complexity, the challenges, the accountability and the responsibility that a person carries,” he said. Narayanan said in the Indian context, the governance responsibilities in a publicly-listed company are quite high and thus if a CEO is being remunerated in consonance with the expectations of an organisation, then it is fair to give him/her whatever is deemed to be fair by that organisation. “Ultimately, you want CEOs to add value as well. One of the measures is the share price that they deliver for investors. Those who have delivered strongly on that at least have added value to somebody rather than just taking a salary. If the principles of accountability, responsibility, skill, talent and value addition are counted in and then people are paid, it’s fine,” said Narayanan.

    Concurring with Narayanan,Marico MD & CEO Saugata Gupta said it’s not the money that attracts people to the post. “I want to leave a legacy behind. What drives me is the sheer adrenaline and the new learnings one gathers in this journey as CEO,” he said. Experts said if one were to look at broad benchmarking in the global context, the expectation from an emerging market player is high growth, and that clearly justifies the compensation CEOs get in India.

    Sudarshan said the numbers no longer raise eyebrows and any attempt to stifle or muzzle compensation is not in the best interests of the organisation and its shareholders. What is a matter of concern for India Inc is the number of women at the top. Women CEOs form only 2% of the million dollar CEO list this year. “This continues to be a grave challenge and we are seeing that many companies are proactively taking steps to ensure diversity at all levels and we will hopefully see a big difference over a period of time. There’s no magic bullet for this issue,” said Sudarshan.

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