ITC, the cigarettes to hotels major, is seeking shareholders’ nod to raise the pay of Chairman and Managing Director Sanjiv Puri and three other directors.
The notice sent to shareholders says the revision is based on the necessity to be competitive and performance-driven, besides the need to retain and reward talent. “The number of stock options remaining under the firm’s schemes is limited and the option for introducing another equity-based long-term incentive scheme is not available, thereby requiring restructuring of executive compensation,” it said. It is proposing to increase Puri’s basic monthly salary by 46.7 per cent to Rs 22 lakh from Rs 15 lakh. It is also proposed to offer Puri an incentive of an annual value not exceeding 0.1 per cent of the company's net profit for the immediately preceding financial year.
Apart from the basic salary and other perquisites like accommodation, car, telephone, medical expenses and others, capped at Rs 15 lakh annually, Puri is under the existing pay structure also eligible for a bonus not exceeding 300 per cent of the basic or consolidated salary.
A hike of 30 per cent in basic salary is proposed for the other board members, Nakul Anand, B Sumant and R Tandon, to Rs 13 lakh a month, from the existing Rs 10 lakh. Also, an incentive of annual value not exceeding 0.05 per cent of net profit for the preceding financial year, per director, is being proposed. The three are, apart from the perks which are capped at Rs 10 lakh annually, also eligible for a performance bonus not exceeding 200 per cent of basic or consolidated salary.
Earlier, ITC had proposed an Employee Stock Options Plan (ESOP) scheme. British American Tobacco, which has 29.5 per cent of the equity, had got this special resolution voted down. Puri had said an ESOP scheme was the best way to retain talent. If that was not available, a cash-settled employee stock appreciation rights scheme was second best.