RELIANCE CHAIRMAN Takes Pay Cut by 66%….
Asia’s richest man, took a 66 percent pay cut to “set a personal example of moderation” after India’s government called for austerity in salaries of executives.
Mukesh Ambani, last year’s highest paid CEO of India Inc. has taken a sharp 66 per cent cut in his annual compensation, a move that could propel moderation of executive salaries in the country.
Recently corporate affairs minister Salman Kursheed and planning commission deputy chairman Montek Singh Ahluwalia had raised concern on ‘vulgar’ salaries paid to executives by companies.
Reliance Industries, India’s largest private sector company on Thursday said its recommendation committee recently had capped the compensation payable to chairman & managing director Mukesh Ambani at Rs 15 crore ‘reflecting his (Ambani’s) desire to set a personal example of moderation in executive compensation.’
Ambani’s revised package includes Rs 1.59 crore as salary, perks and retrial benefits and Rs 13.41 crore as commission for the year 2008-09. This is compared to total compensation of Rs 44.2 crore for 2007-08.
At the same time, India's most valued corporate house also announced a new structure for salaries and remuneration of top executives wherein the pay packets would be capped, as against the prevailing system of commission linked to profits.
The development comes amid debate on whether or not there should be regulation on salaries of CEOs following suggestions by Corporate Affairs Minister Salman Khursheed. The Minister had, however, felt that Boards and shareholders should decide the packages.
The salary component of Ambani’s total pay increased 25 percent to 15.9 million rupees, according to today’s statement.
India’s per capita gross domestic product rose to a record $724 last year, according to the World Bank.
Reliance Industries’ plan to pay shareholders dividend of 13 rupees a share means the Ambani family, which owns a 49 percent stake in India’s most valuable company, will get about 10 billion rupees, or 3.3 percent more payout than last year, according to Bloomberg calculations.
Mukesh’s estranged younger brother Anil Ambani on Sept. 22 said he will forego salary and commission from five of his group companies. Anil’s annual salary is about 300 million rupees, according to the Economic Times.
The Ambani brothers, India’s richest resident billionaires, split the business founded by their father Dhirubhai Ambani, in 2005.
Reliance Industries lowered the commission payable to Mukesh in accordance with limits set by shareholders, according to the statement. The Mumbai-based Reliance will also set the salaries of executives using a “capped structure method” instead of basing them on earnings, the company said.
Mukesh Ambani, a chemical engineer from the University of Bombay, is ranked seventh on Forbes’ 2009 ranking of the world’s billionaires with a net worth of $19.5 billion.
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