EDITORIAL

STREET SMART
The market’s incessant rise has encouraged companies to raise funds from the public

URGE TO SPLURGE
Have money, will spend seems to be the motto of the elite

SHAKERS BUT NOT MARKET MOVERS
The ones who did not have to tap the market to get the numbers

BILLIONAIRE CLUB
A definitive list of India Inc’s richest

HIGHEST PAY PACKETS
List of the best paymasters

METHODOLOGY AND INDEX
How we estimated wealth and earnings of billionaires

BILLIONAIRE CLUB 2006
BILLIONAIRE CLUB 2005

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A Check on pay

Who got the biggest raises? Which company was the most generous? Deepak Korgaonkar and Prasad Sangameshwaran find out

Last month, Jeffrey Immelt, chairman of General Electric, unwittingly opened a fresh debate on a thorny issue for corporate America — CEO compensation. Immelt said that paying chief executives wildly more than their senior managers was "lunacy".

India Inc would take a while to qualify for Immelt’s definition of lunacy, but it’s catching up fast. The creamy layer – executive directors and above – rewarded themselves with a 32 per cent pay hike in 2006-07. In fact, 51 companies gave a salary hike of 40 per cent to its top-tier employees. However, the salaries of other employees in these companies increased by only 22 per cent. Overall, the compensation package (salary, commissions and perquisites) of 104 senior executives has more than doubled and a further 82 executives got pay hikes between 50 per cent and 100 per cent. The number of senior executives earning more than Rs 1 crore annually increased to 576 from 442 in 2005-06. And the Rs 2 crore list almost doubled – from 116 to 228.

ROHTAS GOEL, chairman and managing director of Omaxe, is among the new entrants in the crorepati list with a salary of Rs 2.55 crore

Collectively, these 576 executives took home Rs 1,447 crore from salaries, commissions and perquisites (excluding stock options and deferred pay) in 2006-07 compared with Rs 996 crore the year before.

Of course, the list could be much longer – some HR consultants say it would more than double to somewhere between 1,000 and 1,100 people – if you include senior executives from unlisted companies, including the big international firms, management consultancies and foreign banks, investment bankers, unlisted retail billionaires and sundry others. Consultants estimate that the top salaries in sectors like retail and management consulting would be between Rs 5 crore and Rs 7 crore.

 “Indian companies are finding it more and more acceptable that top compensation is there for the taking,” says R Suresh, managing director, Stanton Chase (India), a global executive search firm. According to him, the norm is that if a company earns more than $ 1 billion ( Rs 4,000 crore) in revenues it can pay an annual compensation of $ 1 million (Rs 4 crore) to its CEO.

If the company has revenues of Rs 1,000-4,000 crore, the CEO compensation can be to the tune of Rs 2 crore, while those companies having a turnover up to Rs 1,000 crore can give their CEOs an annual salary of Rs 1 crore. Given this benchmark, the gross salary of only 13 executives was above Rs 10 crore. The catch: mostly all of them belonged to the promoter families of their businesses.

Continued on next page

Business Standard • December 2007