Management remeuneration-The fine print!
Printed From: The Equity Desk
Category: Market Strategies
Forum Name: Fundamental
Forum Discription: Discuss the operations and finances of any of your companies.Make the other participants aware on the investment opportunities available in a stock on PE free cash flow etc
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1188
Printed Date: 19/Apr/2025 at 5:56am
Topic: Management remeuneration-The fine print!
Posted By: tyler_durden
Subject: Management remeuneration-The fine print!
Date Posted: 04/Sep/2007 at 5:35pm
|
Mukesh's take-home 10 times that of Anil's
When it comes to earning money, Mukesh Ambani is way not only way ahaed of his younger brother Anil, but head and shoulders over the top brass of India Inc.
With a package close to Rs 25 crore (Rs 250 million), Mukesh takes home over 10 times the annual remuneration of his brother Anil, with whom he parted ways over two years ago. When the brothers were together, they received a package of Rs 21.9 crore (Rs 219 million) each at Reliance Industries [ http://money.rediff.com/money/jsp/quote_process.jsp?query=reliance%20industries%20ltd - ] in the financial year 2004-05, according to information available in the company's annual report. Mukesh was chairman and managing director at Reliance Industries, a position he continues to hold today. Anil was vice-chairman and managing director till June 18, 2005. In the latest fiscal ended March 2007, Mukesh Ambani had a salary of Rs 24.51 crore (Rs 245.1 million) as CMD of Reliance Industries which is the highest among more than 10,000 top executives and directors at some 1,200 companies that have disclosed remuneration figures for the year. Anil Ambani took home about Rs 2.42 crore (Rs 24.2 million) he got from three group companies -- Reliance Energy [ http://money.rediff.com/money/jsp/quote_process.jsp?query=reliance%20energy%20ltd - ] (Rs 2.34 crore or Rs 23.4 million), Reliance Communications [ http://money.rediff.com/money/jsp/quote_process.jsp?query=reliance%20communications%20ltd - ] (Rs 480,000) and Reliance National Resources Ltd (Rs 320,000). But he doesn't figure even in the top 100. On the list after Mukesh Ambani is Sun TV [ http://money.rediff.com/money/jsp/quote_process.jsp?query=sun%20tv%20ltd - ] Chairman and Managing Director Kalanithi Maran and Joint Managing Director Kavery Kalanithi, whose annual remuneration stood at Rs 23.26 crore (Rs 232.6 million) each in 2006-07. Bharti Airtel [ http://money.rediff.com/money/jsp/quote_process.jsp?query=bharti%20airtel%20ltd - ] Chairman and Managing Director Sunil Mittal ranked fourth with a salary of about Rs 15 crore (Rs 150 million) and Dr Reddy's Labs Executive Chairman K Anji Reddy was fifth with a take home of Rs 14.4 crore (Rs 144 million). Hero Honda's Chairman Brijmohan Lal Munjal and Managing Director and CEO Pawan Munjal were number six and number seven with Rs 13.99 crore (Rs 139.9 million) and Rs 13.88 crore (Rs 138.8 million) each. Jindal Steel's Executive Vice-Chairman and Managing Director Naveen Jindal (Rs 13.5 crore or RS 135 million), Hero Honda's Joint Managing Director Toshiaki Nakagawa (Rs 13.44 crore or Rs 134.4 million) and JSW Steel [ http://money.rediff.com/money/jsp/quote_process.jsp?query=jsw%20steel%20ltd - ] Vice Chairman and Managing Director Sajjan Jindal (Rs 13.24 crore or Rs 132.4 million) completed the top 10. Commenting on the high salaries being drawn by the CEOs, Vipul Prakash, partner at hiring and executive search solutions provider Elixir Web Solutions', said: "Success today is linked to the head of an organisation and movements happen quickly. In order to attract the best talent and retain them, organisations have to loosen their purse strings." Elixir says it has placed 45 CEOs and also helped companies fill around 300 boardroom positions in the past year. Besides a fixed cash package, companies also offer performance-linked packages like stock options to the CEOs. "If a company performs well, the CEO gets a hike of 20 to 30 per cent on the fixed part of the salary. To add to it, the value of the stock goes up and year after year the amount of stocks also increases," Prakash added. It is a general practice that a CEO gets 40 per cent of his salary at a fixed rate, 30 per cent variable and the remaining 30 per cent in stock options, he said. The annual remuneration of as many as 15 executives stood at more than Rs 10 crore (Rs 100 million). They included Cadila Health CMD Pankaj R Patel (Rs 12.43 crore or Rs 124.3 million), Dr Reddy's Labs MD and Chief Operating Officer Satish Reddy (Rs 10.87 crore or Rs 108.7 million), Dr Reddy's Labs Executive Vice Chairman and CEO G V Prasad (Rs 10.87 crore or Rs 108.7 million), Mercator Lines [ http://money.rediff.com/money/jsp/quote_process.jsp?query=mercator%20lines%20ltd - ] CMD Harish Kumar Mittal (Rs 10.07 crore or Rs 100.7 million) and Mercator Lines Joint MD Atul J Agarwal (Rs 10.07 crore or Rs 100.7 million). More than 300 executives earned above a crore of rupees. Narendra Kala, CEO, Matrix HR Solutions, said: "A CEO is placed at a high risk position, where delivery is very critical. He is the one answerable to the shareholders and he doesn't have the option to go wrong. Only an extraordinary person having complex competencies can be a CEO, and for such a gem of a person the company has to spend." However, there are others who feel that the salaries of CEOs in India is still not at par with global standards. Indian CEOs are underpaid in comparison to their counterparts abroad, although slowly they are coming to a parity, said Saurabh Azad, head of Finesse PR's HR Practice. "Today when the Indian economy is competing in the global market, the salaries will have to be at par with international salaries, or else we will face a brain drain at the CEO level as well," Azad said. ------------- If you aren't fired with enthusiasm, you will be fired with enthusiasm. |
Replies:
Posted By: India_Bull
Date Posted: 04/Sep/2007 at 6:21pm
|
As long as he creates value for shareholders and look at the size of business he deserves it. investors like me dont have any issue, but I also read Sun tv directors also has similar package , and as an investor I am worried in case of Sun TV. ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: basant
Date Posted: 04/Sep/2007 at 7:42pm
|
Remmeuneration cannot be compared in absolute numbers. For example a company making Rs 15,000 crores and giving away Rs 25 crores is as good a sa company making Rs 150 crores and paying Rs 25 lacs! ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: India_Bull
Date Posted: 04/Sep/2007 at 7:45pm
|
I read somewhere SUN TV top people take home around 20-25 crores !!! (What if they have 90% shares), quite a concern for a small company like this compared to Reliance. ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: India_Bull
Date Posted: 04/Sep/2007 at 7:45pm
|
Sorry I didnt realise you moved my previous post here !!! ------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: deveshkayal
Date Posted: 04/Sep/2007 at 10:20pm
|
Madras Cements CEO takes away the highest remuneration, not Mukesh Ambani. But MA's salary is for FY06 while the former CEO for FY07....so wait till MA's salary is out in the public. ------------- "You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett |
Posted By: tyler_durden
Date Posted: 05/Sep/2007 at 1:50pm
even i didn't realised that my post was here  ...
i feel best part is to keep part of salary fixed...and major part shud be performance linked...and that is wat is generally followed....
if RIL earns huge profits so will mukesh earn big pay packets....
but ithink the stage where mukesh is..it wont matter whetehr he s taking 25 crore or 2.5 crore...wat will matter to him is how RIL is doin?? because performance of RIL reflects on india's richest people...mukesh is right there on top... ------------- If you aren't fired with enthusiasm, you will be fired with enthusiasm. |
Posted By: catcall
Date Posted: 05/Sep/2007 at 7:26pm
|
Talking of employees of RIL other than MA, here's an anecdote:
One day, three consultants, one from RIL, one from Infosys and one from TCS, went out for a walk. ------------- There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing! |
Posted By: tyler_durden
Date Posted: 05/Sep/2007 at 7:42pm
|
one of my friend was with aviva ... he's now with reliance... he told me relaince has given clear instructions to its HR....to absorb all the best talent from market...and they re paying huge premium for it...fat salaries ------------- If you aren't fired with enthusiasm, you will be fired with enthusiasm. |
Posted By: catcall
Date Posted: 05/Sep/2007 at 8:00pm
That's true, it's like "daam to tum chaho, time jop hum chahe"!! ------------- There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing! |
Posted By: tyler_durden
Date Posted: 05/Sep/2007 at 11:57am
|
thats wat dhirubbhai had done...
hired the best people from PSUs by giving them huge pay cheques...
rest it is known fact that wat happens in political corridors is known to ambanis first hand ------------- If you aren't fired with enthusiasm, you will be fired with enthusiasm. |
Posted By: johnnybravo
Date Posted: 06/Sep/2007 at 1:47pm
|
I know somebody who is making working models for one of the reliance refinery plants at Jamnagar. That guy was telling me that RIL employees are given incentives (bonus money) if they complete the said project in time or before time. This money is given in tranches. If the project doesn't complete in time, the paid money is recovered from the Employees with interest! For Reliance their strong workforce is in a way one of the better consumers(read exploits) |
Posted By: tyler_durden
Date Posted: 06/Sep/2007 at 2:30pm
|
thats why they re masters in executing big projects...here is one incidence from the days of sir DHIRUBHAI:
The experience of putting up projects in the shortest possible time so as to avoid cost and time over-runs served Mukesh in good stead when Dhirubhai purchased the latest polyster filament yarn technology from DuPont, and decided to set up a 10,000 tonnes per annum plant at a 300-acre site in Patalganga, about 65 kilometres from Bombay. DuPont would have taken two years to raise such a complex, but Mukesh, working with a small project team, completed the job in an incredible 18 months. again when patalganga plant was flooded ... reliance asked some US firm to help them re start the plant...they asked for 18 months or so and reliance had it up in 3-4 months....(i might be wrong with exact figures in this second case but reliance completed the job in 1/4 of time) ------------- If you aren't fired with enthusiasm, you will be fired with enthusiasm. |
Posted By: kulman
Date Posted: 06/Sep/2007 at 2:50pm
|
'It has become fashionable at public companies to describe almost every compensation plan as aligning the interests of management with those of shareholders. In our book, alignment means being a partner in both directions, not just on the upside. Many 'alignment' plans flunk this basic test, being artful forms of 'heads I win, tails you lose.' --- Warren Buffett
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: ramsey123
Date Posted: 05/Apr/2011 at 12:24pm
|
Basantji,
How do you ascertain if Management compensation is acceptable and displays integrity?
Do you look for a annual salary as a percentage of Net Profit in that fiscal? Do you think that the salary should also vary along with the net profit?
Your thoughts overall?
Thanks,
Ram.
|
Posted By: basant
Date Posted: 05/Apr/2011 at 9:43am
|
No I do not spend too much time doing that. Companies that have high RoE and use theitr cash with a view not to dilute the RoE will generally not have such issues. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: ramsey123
Date Posted: 05/Apr/2011 at 10:46am
|
"and use theitr cash with a view not to dilute the RoE"
Could you please give examples of this? I can think of one being unnecessary acquisitions/diversifications (trying to do too many things which end up failing) rather than sticking to your core strengths.
Thanks,
Ram.
|
Posted By: basant
Date Posted: 06/Apr/2011 at 2:37pm
|
Absolutely. That is what we do not want our companies when they are reporting 30%+ RoEs. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: extreme3
Date Posted: 06/Apr/2011 at 2:47pm
What about great mgmt led Titan's plan to diversify from watch/jwellery to total lifestyle retailer ??? |
Posted By: ramsey123
Date Posted: 21/Apr/2011 at 12:10pm
"It makes clear to us that a general characteristic of such companies is a management that does not let its preoccupation with long range planning prevent it from exerting constant vigilance in performing the day-to-day tasks of ordinary business outstandingly well."
- Philip Arthur Fisher
|
Posted By: subu76
Date Posted: 15/Jun/2011 at 4:52pm
|
Very interesting salary structure at JC Penny for their new CEO http://features.blogs.fortune.cnn.com/2011/06/15/why-ron-johnson-is-paying-for-the-privilege-of-running-j-c-penney/ - Link The new CEO puts in $50 million 1. If the stock does not move for 6 years he loses it all 2. If the stock doubles his stocks would be worth $385 million
|
Posted By: Kabootar
Date Posted: 15/Jun/2011 at 11:46pm
|
So he will be a completely market cap focussed CEO? Actually isnt that a bad thing? ------------- Verbal diarrhoea! A most deadly disease. |
Posted By: subu76
Date Posted: 15/Jun/2011 at 12:04pm
Ideally you want market cap along with high returns but just market cap will do just fine  If he can make it a profitable firm he can raise shareprices just by buying back stock... Anyway, i doubt JC Penny shareholders can complain
|