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Remunerating the Top Executives Faculty: Ms. Toral Shah Course: PGD ECOM

Remunerating the Top Executives Faculty: Ms. Toral Shah Course: PGD ECOM. Components of Remuneration. 1. Salary 2. Bonus 3. Commission 4. Long term incentives 5. Perquisites. 1. Salary. Serves as the basis for the other components. Salary norms not observed for top executives.

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Remunerating the Top Executives Faculty: Ms. Toral Shah Course: PGD ECOM

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  1. Remunerating the Top ExecutivesFaculty: Ms. Toral ShahCourse: PGD ECOM

  2. Components of Remuneration • 1. Salary • 2. Bonus • 3. Commission • 4. Long term incentives • 5. Perquisites

  3. 1. Salary • Serves as the basis for the other components. • Salary norms not observed for top executives. • Applicable to cuts by the government.

  4. 2. Bonus • Usually short term. • Annual. • Based on performance. • Executives deserve bonus as they influence the organizational success. • Several methods to pay bonus.

  5. 3. Commission • Paid as a percentage of profits. • Based on achievements. • Constitutes a major share in executive remuneration. • Companies Act puts a ceiling on the commission amount payable to executives.

  6. 4. Long term incentives • Stock Options. • Purchase shares at a fixed price.

  7. 5. Perquisites • a special right or privilege enjoyed as a result of one's position. • fringe benefit. • Any monetary or other incidental benefit beyond salary. • personal transportation, personal meals in the Company’s executive dining room, and reimbursement of home security system monitoring fees.

  8. 5. Perquisites • Car • Accommodation • Spouse travel • Club memberships • Relocation expenses • Use of company plane • Electricity and gas bills

  9. India’s highest paid CEOs • Mukesh D Ambani • Rank: No 1 • Designation: Chairman and managing director • Company: Reliance Industries Ltd • Compensation: Rs 44.02 crore (Rs 440.2 million) • Reliance market cap: Rs 193,076.66 crore (Rs 1930.77 billion)

  10. India’s highest paid CEOs • KalanithiMaran • Rank: No 2 • Company: Sun TV Network Limited • Designation: Chairman and MD • Compensation: Rs 32.41 crore • (Rs 324.1 million) • Sun TV market cap: Rs 6,914.48 crore (Rs 69.14 billion)

  11. India’s highest paid CEOs • P R Ramasubrahmaneya Rajha • Rank: No 3 • Company: Madras Cements Limited • Designation: Chairman and managing director • Compensation: Rs 32.40 crore (Rs 324 million) • Madras Cements market cap: Rs 774.10 crore (Rs 7.74 billion)

  12. India’s highest paid CEOs • Anil D Ambani • Rank: No 4 • Company: Reliance Communications • Designation: Chairman • Compensation: Rs 30.03 crore (Rs 300.3 million) • Reliance Communications market cap: Rs 35,449.20 crore (Rs 354.49 billion)

  13. India’s highest paid CEOs • Malvinder Mohan SinghRank: No 5 • Company: Ranbaxy Laboratories Limited • Designation: Chief executive officer and managing director • Compensation: Rs 19.58 crore (Rs 195.8 million) • Ranbaxy market cap: Rs 8,536.22 crore (Rs 85.36 billion)

  14. India’s highest paid CEOs • Sunil Bharti Mittal • Rank: No 6 • Company: Bharti Airtel Limited • Designation: Chairman and managing director • Compensation: Rs 19.55 crore (Rs 195.5 million) • Bharti Airtel market cap: Rs 120,725.42 crore (Rs 1,207.25 billion)

  15. India’s highest paid CEOs • Naveen Jindal • Rank: No 7 • Company: Jindal Steel & Power Limited • Designation: Executive vice chairman and managing director • Compensation: Rs 16.93 crore (Rs 169.3 million) • Jindal Steel & Power market cap: Rs 15,754.20 crore (Rs 157.54 billion)

  16. India’s highest paid CEOs • Vivek Kumar Jain • Rank: No 8 • Company: Gujarat Fluorochemicals Limited • Designation: Managing director • Compensation: Rs 16.87 crore (Rs 168.7 million) • Gujarat Fluorochemicals market cap: Rs 708.12 crore (Rs 7.08 billion)

  17. India’s highest paid CEOs • SajjanJindal • Rank: No 9 • Company: J S W Steel Limited • Designation: Vice chairman and managing director • Compensation: Rs 16.73 crore (Rs 167.3 million) • J S W Steel market cap: Rs 4,111.20 crore (Rs 41.11 billion)

  18. India’s highest paid CEOs • Pawan Kant Munjal • Rank: No 10 • Company: Hero Honda Motors Limited • Designation: Managing director and chief executive officer • Compensation: Rs 15.73 crore (Rs 157.3 million) • Hero Honda market cap: Rs 18,772.80 crore (Rs 187.73 billion)

  19. Executive remuneration in India • Wage norms, job description, evaluation, grades of pay are ignored. • Tendency to link salary to performance. • Executives sent abroad are paid more in a foreign country. Same executive paid less when returns to India. • Virtual high jacking of executives.

  20. Why pay more to executives as compared to employees?

  21. Why pay more to executives • They are important for the organization. • Scarcity of qualified executives. • Retaining them difficult. • They need to be motivated. • Avoid corruption. • Difference between wages of worker and executives.

  22. Top paid Americans

  23. Remedy to avoid misuse of perks • Income beyond limit subject to taxation. • Socially responsible executives. • Start more educational institutes for training. • Stock option plan.

  24. Assignment • Research the compensation policy for the senior management of an existing company. • Include perks, commission and other details taught in class. • Groups of 3 students.

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