CEO salaries have been a seasonal topic of discussion, debate and criticism by Indian media. The new man to join the club is Vishal Sikka whose Rs. 30 crore pay package has been the main news, rather than his competence that made a high level Infosys Panel choose him for the coveted job.

The other two who have been much talked about, as India’s highest paying CEO’s are Kalanithi Maran and Naveen Jindal. Both promoters of companies they have build on their own vision and caliber. While some may claim that Naveen Jindal is a second-generation entrepreneur, the company he inherited from his father was much smaller than the size and scale he has taken JSPL to in the last 10 years of his leadership. Similarly, Kalanithi Maran has made a formidable empire both in the Aviation as well as broadcasting sectors, on his sheer competence. Critics though allege that the rise of the two may have been catalyzed by their political allegiances. And even if true, there were many who had a stronger foothold in corridors of power than Jindal and Maran, yet failed to build businesses 1/10th the size they were able to achieve.

Last week when a Tata Motors Board Resolution for Top Management pay hike was struck down, both Maran and Jindal became topics of discussion in the media. Strangely when the profit linked salary of Naveen Jindal fell in 2013-14 by Rs. 18 crore that too made headlines in almost every newspaper.

The biggest question one needs to ask is whether a CEO or a Promoter who delivers value to his shareholders is entitled to take a chunk of profit as legitimate remuneration from the company or not. If not, then what’s the incentive for the person to work day and night to make it happen. After all, a profit-linked pay package is a transparent way to award the man at the helm of affairs. There are ample number of Indian promoters who keep their pay packages low but dump all their personal extravaganzas on their listed companies without the world even getting a whiff of it. In contrast, a Naveen Jindal and Kalanithi Maran go to the shareholders to get a fair share of their due approved.

These transparent promoters also end up paying huge amounts as Income Tax to the government while the shady ones set off the listed company’s taxes by loading their personal expenses from Profits. Ironically, the media does criticize Naveen Jindal for seeking a pay of Rs 75 crore per annum. Now when it is clear and open that a large part of the Rs. 75 crore 2 years back was linked to profits of JSPL, there is no acknowledgement that the salary was not assured but based on his performance. On a Profit of Rs. 1900 crore odd, a Rs 37 crore salary is less than 2%, with the rest 98% plus going to the company’s reserves. By no means is 2% too huge an amount for a Promoter CEO to take home alongwith his share of dividend. And the fall of Rs. 18 crore on a profit drop of Rs. 1000 crore odd does show that the formula for calculation is sound and robust.

Its high time media focuses their energy to dig out the personal expenses promoters load on their listed companies rather than talking about those promoters who take their due openly and transparently, after due approvals based on a established criteria.

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