Michael Johnson, CEO of global nutrition and weight management company, Herbalife, took a 36 per cent pay cut in 2014 for failing to meet performance targets. In 2009, Vikram Pandit, the then CEO of Citibank, decided to take a token salary of $1 and no bonus until the bank returned to profitability. In 2008, Jamie Dimson of JP Morgan Chase, John Mack of Morgan Stanley, Rick Wagoner of GM Corp and Alan Mulally of Ford Motor agreed to work for $1, owing to the recession. Most recently, Ross McEwan, CEO of Royal Bank of Scotland, which is undergoing restructuring, turned back a $1-million incentive. Muhtar Kent, CEO of Coca-Cola, which saw profits plunge from $1.71 billion in 2013 to $770 million in 2014, is said to have declined his $25 million bonus owing to the company’s slack in performance.
Compare this with India, where Sanjay Aggarwal, former CEO, Kingfisher Airlines, was paid nearly Rs 4 crore (2012-13) even after the company’s mounting losses grounded the carrier and the employees were not paid for 10 months. (It currently has a debt of $2 billion, and the staffers have gone without pay for over two years). Media baron Kalanithi Maran, as executive chairman, and his wife Kavery Kalanithi, as executive director, got a 6.56 per cent hike in salary in 2013-14 though Sun TV network’s net profit grew only by 4.91 per cent. The couple were the highest earning corporate leaders in India that year, with a package of some Rs 120 crore. Indian employers seem to be determined to keep their CEOs happy even at the cost of the company and other employees.
“There will be a definite increase (in CEO salary). The person on top requires being in the best frame of mind, as he will be going in for personal engagements for the company,” says Aditya Narayan Mishra, President-Staffing, Randstad India. With particular reference to the current year, he said that there was a positive outlook in businesses and everybody would be looking at the future (5-6 years). “Companies will be looking to cement the CEO with the organisation,” he says adding that good talent at top level was in short supply and companies had to retain them at all costs. “His (CEO) compensation package is ‘critical’ for promoters,” Mishra says.
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