Aiming to set a 'personal example' of moderation in executive salaries, Reliance Industries Limited said on Thursday its chief Mukesh Ambani has decided to lower his pay package by nearly two-thirds to Rs 15 crore (Rs 150 million) for 2008-09.
At the same time, India's most valued corporate house also announced a new structure for salaries and remuneration of top executives wherein the pay packets would be capped, as against the prevailing system of commission linked to profits.
As a result of scaling down of his package from over Rs 44 crore (Rs 440 million) in 2007-08 to Rs 15 crore (Rs 150 million), Mukesh Ambani would get a lot less than many other industrialists and executives heading companies with a size less than one-tenth of RIL.
The development comes amid debate on whether or not there should be regulation on salaries of CEOs following suggestions by corporate affairs minister Salman Khursheed. The minister had, however, felt that boards and shareholders should decide the packages.
The compensation for the RIL chairman and managing director for the latest fiscal is down 66 per cent from over Rs 44 crore (Rs 440 million) in the previous year 2007-08 and is 98 per cent below the limit of five per cent of the net profit of the company, as per the Companies Act, RIL said.
"The remuneration committee of the board of RIL at its meeting held recently decided the compensation payable to Mukesh Ambani, CMD of RIL, at Rs 15 crore (Rs 150 million) in aggregate reflecting his desire to set a personal example of moderation in executive compensation," the company said.
From now on, the company has also decided to adopt the capped structure method of deciding executive compensation in RIL, instead of pegging it as a percentage of net profit.
Mukesh's salary is lower than not only many other industrialists in India, but also CEOs of RIL's global peers like ExxonMobil and Shell.
The pay packet of Shell Chief Jeroen van der Veer in the same period stood at a whopping Rs 71.21 crore (Rs 712.1 million).
Meanwhile in FY'09, the CEO compensation of ExxonMobil R W Tillerson stood at Rs 66.38 crore (Rs 663.8 million), Chevron chief D J O Reilly had a total pay packet of Rs 85.66 crore (Rs 856.6 million) and BP's A B Hayward's salary stood at Rs 20.94 crore (Rs 209.4 million).
In fiscal year 2008-09, ADAG group chief Anil Ambani took home Rs 52 crore (Rs 520 million), much more than any other corporate honcho in India.
RIL's remuneration committee has observed that the lower compensation of Mukesh would also set good principles that would govern executive compensation in the company.
Image: Mukesh Ambani
