NO LIMITS TO GREED
In this world, everything is not perfect. The corporate world is no exception. Recently, US Senator Bernie Sanders tweeted: “Amazon founder Jeff Bezos’s wealth increases by US $ 275 million (` 27.5 crore) every single day. Meanwhile, Amazon workers have to rely on food stamps and public assistance ( government subsidies) just to survive.” The picture is no different in India. ( See graph below for the list of top 10 richest persons in India according to Forbes in FY 2018.)
Reliance Industries chief Mukesh Ambani has capped his annual salary at ` 15 crore for the last 10 years but his wealth increased by ` 165.24 crore every day between 2015 and 2018. The total promoter and promoter group shareholding of RIL is 47.55 per cent — 2,926,202,148 shares out of total 6,154,340,804 are owned by Mukesh Ambani and members of his family.
The stock price of RIL in FY 2015 was ` 506.3/ share which increased to ` 1,253.15 as on September 14 this year. The value of shares owned by Mukesh Ambani and family was ` 1,48,153.506 crore in 2015 at the price of ` 506.3 which increased to ` 3,29,102.253 crore at current price of RIL which is ` 1,253.15 per share.
A recent report based on Capitaline data and annual reports says that in India, top corporate executives that include CEOs, board of directors, promoters, presidents and vice- presidents earn 243 times more than average employee. While the median remuneration of Indian employees was only ` 5,65,748 in 2017, the average global CEO salary was around $ 3.6 million (` 23.6 crore) and it was $ 1.5 million (` 9.76 crore) for Indian CEOs.
Kalanithi Maran, executive chairman of Sun TV Networks, and Kavery Kalanithi, executive director of Sun TV Networks, together took home ` 155.86 crore in remuneration in 2017. Omkar S. Kanwar, chairman and MD of Apollo Tyres and Neeraj Kanwar, vice- chairman and MD of Apollo Tyres, combinedly took home ` 76.63 crore in FY 2017. Likewise Arvind Poddar, CMD, and Rajiv Poddar, joint managing director, Balakrishna Industries, together got ` 65.31 crore. The nexus will become more evident if we look at remunerations of senior executives ( nonpromoters). A. M. Naik, the group chairman of L& T, India’s largest infrastructure company, was the highest paid CEO in FY 2017. He took home ` 78.91 crore in remuneration. The other top paid executives ( non- promoters) are Om Prakash Manchanda of Dr Lal Path Labs and N. Chandrasekharan of TCS, each of whom took home more than ` 30 crore annually. What is interesting is that the compensation to the top three executives of L& T alone takes the company’s remuneration bill to around ` 116.97 crore in FY 2017. These salaries do not include Employee Stock Options ( ESOPs) as many companies do not issue ESOPs in India. However, if ESOPS are considered, C. P. Gurnani, CEO at Tech Mahindra, topped the list with a total payout of ` 150 crore.
According to the filing made by Flipkart to the Registrar of Companies in April 2015 to March 2016, India’s largest home grown ecommerce company paid over ` 10 crore each to six of its employees and over a crore each to 101 others. The compensation to these top- paid employees amounted to ` 300 crore. These massive payouts were made even as the company was bleeding.
In FY 2016, the Flipkart Internet posted a loss of ` 2,306 crore, more than double from a year ago. This was despite revenue growing around 140 per cent to ` 1,952 crore. The payouts are also from a period when the Bengaluru- based company was facing devaluation and difficulty in raising fresh funds at preferred valuation. These remunerations include salary, allowances, leave travel allowances, company’s contribution to provident fund, superannuation fund, and gratuity fund, among other things.
No theory or logic justifies this kind of excessive salaries. Defining extreme poverty as living on less than $ 1.9 (` 123) a day at a time when 73 million ( 7.3 crore) people are still below the poverty line. According to the International Food Policy Research Institute ranking, India is ranked 100th out of 119 countries in the hunger index. India’s per capita income is only ` 1,11,782 in fiscal 2017- 18. While an average Indian earns ` 1,11.762 a year, the average Indian CEO earns ` 9.76 crore annually. Salaries of these senior executives can put to shame even our MPs, who get ` 600,000 in annual salary, excluding perks. The per capita income of India is likely to increase by 8.3 per cent in 2018. The wealth of the average Indian reflected by per capita income is going to increase from ` 103,219 in 2017 to ` 111,762 in 2018. However, the wealth of Mukesh Ambani and family has been increasing by ` 165 crore each passing day!
( The author is Assistant Professor, Dept: School of Humanities & Social Sciences Institute: Thapar Institute of Engineering & Technology, Patiala, Punjab)