Call them greedy?

The statement thudded into the heart of every top corporate boardroom and sent shivers down the swish penthouse set. Suddenly everyone was wondering what was indeed considered correct to take home. This, despite the fact that while the ranks of non-promoter managers earning more than Rs 1 crore have grown in the last five years, it was still the promoter-managers who gave themselves the biggest hikes. The debate naturally created a deep wedge between CEOs and investors on what is proper remuneration for the corporate honcho.

Take the example of the Chairman of Gujarat Ambuja Cements GACL, N Sekhsaria, one of India8217;s highest paid CEOs. Sekhsaria earns Rs 2.69 crore per annum, up from less than Rs 1 crore three years ago. The hike came despite the company8217;s profits falling from its peak of Rs 428 crore in June 2000 to Rs 186 crore this year see chart, making it one of the worst performing companies paying a half-a-million dollar salary to its promoter-CEO.

Similarly, Sterlite8217;s Chairman and Managing Director Anil Agarwal8217;s salary has shot up almost four times in the last three years to Rs 2.44 crore per annum, despite the company8217;s profits plummeting from Rs 241 crore in 2000 to Rs 91 crore in 2002. 8216;8216;Our profits fell because we sold off of one of our subsidiaries,8217;8217; clarifies a Sterlite official, while refusing to comment on his CEO8217;s salary.

Tarun Das, Director-General of the Confederation of Indian Industries CII, cautions, 8216;8216;We must not follow the US model of paying the CEOs excessive amounts. Indian CEOs should have some limit in terms of a personal emoluments structure.8217;8217; Kirit Somaiya, president of Investors8217; Grievances Forum, is not averse to the idea of high salaries as long as 8216;8216;the promoter-CEO does not siphon off funds from the company through manipulative means.8217;8217;

There are other startling examples of skewed ratios between company performance and corporate salaries. Wockhardt8217;s Chairman and Managing Director H F Khorakiwala took home a salary of Rs 3.17 crore, making him one of India8217;s top 10 best paid CEOs. However, the pharmaceutical firm8217;s turnover did not make it to the list for great sales and profits figures. Wockhardt officials refused to comment on their CEO8217;s salary as did Gujarat Ambuja.

8216;8216;This is not good,8217;8217; says Das. 8216;8216;It is like the American system. However, we must change it voluntarily, without legislation and government intervention,8217;8217; he hastens to add.

While it will be difficult for recession-hit companies like Sterlite, GACL or even Wockhardt to justify the sky-rocketing salaries of their top management, performers are equally guilty of giving themselves dream pay hikes. In total contrast to Narayana Murthy8217;s formula for corporate salaries, the Hyderabad-based pharmaceutical major Dr Reddy8217;s Chairman, Dr Anji Reddy, gave himself a pay hike of Rs 6 crore to become the highest paid CEO last year.

However, Dr Reddy8217;s Laboratories net profits had also shot up from Rs 48 crore in 1998 to Rs 459 crore as on March, 2002. 8216;8216;Dr Reddy8217;s salary is in accordance with the company8217;s performance8230; but the same cannot be said about the others,8217;8217; says R Venkatachalam, a Mumbai-based management consultant.

The Ambani brothers are India8217;s most expensive employees 8212; Mukesh and Anil earn Rs 8.85 crore and Rs 7.13 crore respectively as on March 2001. But if you consider the explosive growth of Reliance Industries Limited8217;s RIL combined turnover from Rs 10,450 crore in sales five years ago to today8217;s turnover of Rs 57,120 crore, with a net profit of Rs 3,280 crore, the high salary for its A Team is worth the money, say company insiders.

Hero Honda is an another company which believes in paying its CEOs the best. Hero Honda8217;s four top managers including father and son, Brijmohan Munjal and Pawan Munjal, took home more than Rs 7.2 crore each as compared to Rs 4 crore they earned last year. The Munjals8217; hard work can be gauged by the fact that the company has dislodged Bajaj Auto as the No 1 motorcycle-maker to record a net profit of Rs 462 crore this March, as compared to Rs 76 crore recorded only five years ago.

Bajaj Auto8217;s Chairman and Managing Director Rahul Bajaj, however, took home a modest Rs 56 lakh. Says Bajaj: 8216;8216;I think the CEO8217;s salary should be reasonable, particularly in a country like ours. While we cannot pay American salaries, we have to balance it out so that we do not lose our key employees to foreign companies or to our rivals. I believe a CEO should get a salary which should have some relation to the junior level employees and there should not be a very big difference between the No 1 and No 2.8217;8217; Agrees N Kumar, a Human Resources consultant, when he says, 8216;8216;The gap has to get narrower. We must bring the salary structure of top officials within a 20 to 30 per cent band.8217;8217; Moreover, at least at the time of cost-cutting, CEOs should take the lead by cutting their own salaries.

For salaries are not the only cheques which promoter-CEOs take home. They get hefty dividends which could be anywhere between 40 to 50 per cent of the total dividend payouts as per the shareholdings of the promoters. For instance, if Sterlite8217;s Agarwal succeeds in his buyback plan, his company can delist all shares by next year and he can take the entire dividend home.

Ever since the government liberalised salary norms, Indian CEOs have not looked back. Both professional and promoter CEOs now take home a salary at least 100 to 300 per cent more than the Number 2.

The good thing, however, is that a company which pays its managers well does not discriminate between promoters and non-promoters.

For instance, Reliance, Ranbaxy, Wipro and Infosys are some of the best paying companies for non-promoter managers as well. One of India8217;s highest paid non-promoter manager is Wipro Infotech8217;s Vice-Chairman, Vivek Paul, who gets a salary of Rs 4.6 crore while his boss, Wipro Chairman, Azim Premji, took home only Rs 1.86 crore last year, even as his company breaks records in profits and sales every year.

The question that arises is: Where should India Inc draw the line?

Says Venugopal Dhoot, Chairman of the Rs 3,500 crore Videocon empire, 8216;8216;I don8217;t mind paying good salaries to people who are dedicated to their jobs and do not look at their clock. For me, salary is not the criterion, commitment is.8217;8217;

Bajaj agrees too, 8216;8216;As long as the board of directors and shareholders are informed about the CEO8217;s salaries, it8217;s okay with me. However, the government should not come in and start fixing salaries.8217;8217;

Perhaps it is Anu Aga, Chairperson of Thermax, who puts the debate in perspective when she says, 8216;8216;As a CEO, I think we have to be accountable not only to companies but to the nation. We must learn to include the 51 per cent who are poor and have nothing to look forward to. If we create wealth, the question is how do we distribute it so that the entire country prospers.8217;8217;