Atul Karmarkar.Com

Came across an article in ET, which mentioned an increase in cases where the annual remuneration of top executives is quite disproportionate to the company’s net profit.

While CEO salaries have been a topic of public debate in the West, they haven’t caught the attention of shareholders back home. It’s time they did, though. An ET study found that there are several corporates whose top executives draw a remuneration ranging from 10% to 70% of their reported profit after tax.

Take the case of optical storage media manufacturer Moser Baer. Promoter cum managing director Deepak Puri grossed an annual package of Rs 2.08 crore in FY06, which is 44% of the company’s net profit. Add executive director Ratul Puri’s pay packet of Rs 1.25 crore, and the duo took home 71% of the company’s net profit last year.

Other examples where executives’ annual package is disproportionate to the company’s net profit include iGate Global’s CEO Phaneesh Murthy, Ashok Chaturvedi of Flex Industries, Ashok Goel of Essel Propack, S Narayanan and H Nandi of MRO-TEK, Kalyan Ganguly of United Breweries, Hemendra Kothari of DSP Merrill Lynch, Kalanithi Maran and Kavery Maran of Sun TV, and Prathap Reddy of Apollo Hospitals.

The ET study looked at 400 corporate directors from 245 companies who have declared annual packages of Rs 1 crore plus as per their annual reports and calculated their compensation figures as a percentage of net profit.