THE RECENT listing of Avenue Supermarts — the company that runs D-Mart stores — not only established it as the largest Indian retailer by market capitalisation but also, in the process, unlocked huge wealth for its professional MD and chief executive officer, Ignatius Navil Noronha, who has emerged as the richest professional CEO in the country with an aggregate wealth of over Rs 1,000 crore.
As on April 14 this year, the market value of Noronha’s 2.2 per cent equity holding in the company stood at Rs 1,074 crore. Noronha also took home Rs 17.95 crore as remuneration for the year 2015-16.
According to the data of all listed companies with market capitalisation of over Rs 10,000 crore, sourced from Prime Database, Noronha’s wealth (salary and equity holding in the company) is significantly higher than other non-promoter MDs and CEOs. His wealth from his current job is more than double that of Aditya Puri, MD, HDFC Bank, who comes second in the list. The combined value of Puri’s salary in 2015-16 and the current value of his equity holdings in HDFC Bank (as on March 31, 2016) adds up to Rs 449.5 crore. The third on the list is Renu Sud Karnad, with the value of her shareholding and salary of FY ‘16 aggregating to Rs 379.5 crore.
Arun Suresh Chandravarkar of Biocon and Gagan Banga of Indiabulls Housing Finance complete the list of top five with their annual remuneration and equity holding aggregating to Rs 245 crore and Rs 237 crore respectively.
Vishal Sikka, MD & CEO of Infosys, whose pay hike and high remuneration was one of the concerns flagged by the founders in February 2017 when they raised issues of corporate governance within the company, occupies 10th spot in the list. He, however, tops the list of professional CEOs when it comes to just the remuneration for a year, as he took home Rs 48.7 crore in FY ‘16.
N Chandrasekaran, the then MD and CEO of TCS who has now been appointed as chairman of Tata Sons, took home Rs 25.66 crore in remuneration in FY ‘16.
Experts who understand boardroom issues and corporate governance said that in keeping with the trend in the US, where promoters are relying more on professional CEOs, India is also witnessing a change on that front. “In many cases, promoters in India are realising that while they have a vision for the company, they or their sons may not be the best person in terms of education and skill to take the company forward and grow,” said Prithvi Haldea, chairman, Prime Database.
He further said that while the money paid is important, it is only a small part of the total cost for a company. “You need to pay well to get a good professional and nobody should have an issue with the high salary of a high performing CEO as all stakeholders and promoters benefit if the company does well,” he said.
Supporting wealth creation and higher salaries for deserving CEOs, Manish Sabharwal, chairman, Teamlease, said: “There has been an increasing shift towards talent since 1991, and good CEOs will become much more valuable… Over the next 10 years, the country is expected to witness strong growth and you need a good CEO who can take advantage of that.”
A source who knows Radhakishan Damani, the promoter of Avenue Supermarts who holds 82.2 per cent stake in the nearly Rs 50,000 crore company, said, “Damani does not interfere much in the management of the company. That’s how it should be, while promoters must be involved in the company’s macro outlook and should be a part of decision-making, they also need to yield when good points are made.”
While Noronha, who earlier worked with HUL and has been the CEO of Avenue Supermarts since 2007, took home a salary of close to Rs 18 crore in FY ‘16, his fortunes changed after the listing of the company in which he holds 2.2 per cent stake and which now commands a market capitalisation of Rs 48,931 crore.
Avenue Supermarts is currently the 51st most valued company in the country by market capitalisation, bigger than Tata Steel, Cipla and Dr Reddy’s Laboratories.