Crorepati CEO club grew 18% last fiscal year

An analysis of over 3,500 listed companies’ annual reports available with database firm Capitaline shows that FY17 had 1,607 executives as a part of the key management earning more than Rs 1 crore, a jump of 18 per cent from 1,359 executives in FY16.

“The growing number of crorepati executives shows that the story of jobless growth is relevant only for mid and operational levels. At the leadership level, premium for the right talent continues to grow,” said R Suresh, independent corporate advisor on leadership. “Also, the culture of multiple business units for Indian corporate houses has finally crept in, leading to an increased number of high compensation executives.”

The top slot on the list was captured by A M Naik, group chairman, Larsen & Toubro (L&T), with a compensation of Rs 78.9 crore in 2016-17. While Naik stepped down as executive chairman in September after a 53-year career at L&T, he continues to be the non-executive chairman. His salary for 2016-17 includes an encashment of accumulated past service leave of Rs 32.2 crore, besides Rs 19.01 crore as perquisite value related to employee stock options (ESOPs) exercised during the year in respect of stock options granted over several years.

The next executive on the list was N Chandrasekaran, chairman of Tata Consultancy Services, at number 15. He had a remuneration of Rs 30.2 crore. In February, he moved to Tata Sons, the primary holding company of Tata group, as chairman.

 

The remaining 13 executives in the top 15 were promoters who were also executives in their firms. Kalanithi Maran and Kavery Kalanithi, chairman and director, respectively, at Sun TV Network, earned Rs 77.9 crore each in FY17. They were followed by Pawan Kant Munjal, chairman and managing director and chief executive officer of Hero MotoCorp, and D B Gupta, chairman of Lupin — earning Rs 59.7 crore and Rs 47.7 crore, respectively.

“While professional executives are eligible for ESOPs, promoter executives are not. Also, annual reports may not explicitly provide value of equity compensation paid to senior management employees unless ESOPs are exercised,” said Anubhav Gupta, director at Aon Hewitt, the UK-based human capital and management consultant. “This leads to a dominant presence of promoter executives on highest-paid executives list.”

Annual reports might also not provide salaries of executives who might be earning more than Rs 1 crore and are not a part of the key management. The number of crorepati executives would be much higher if unlisted companies were also considered.