Crorepatis on rise in listed companies' boards

The number of crorepati directors in listed companies is on the rise as boards take up additional responsibilities and risks, even as competition in hiring from start-ups intensify.

The cap on the number of directorships for independent directors, which came into effect in 2014-15, has also pushed up their remuneration.

According to Prime Database, the number of directors earning Rs 1 crore or more annually has risen 40 per cent from 920 in 2011-12 to 1,295 in 2014-15. The total remuneration paid to these directors rose nearly 50 per cent to Rs 4,673.95 crore in 2014-15 from Rs 3,132.25 crore in 2011-12.

The data include both executive directors, who earn regular salaries, and non-executive directors, whose earnings are through sitting fees and commissions. Earnings for the latter category, which includes independent directors, are usually an aggregate of incomes from all listed directorships.

Kris Lakshmikanth, founder, The Headhunters India, an executive search firm, said competition from start-ups and e-commerce firms was forcing companies to reward senior employees with higher salaries.

"Today, it is like a game of revolving chairs. If you do not deliver in three quarters, you are out in the fourth. In an uncertain scenario, the shelf life of a director is limited. This uncertainty plays a role," he added.

At the top end, where promoters continue to rule, people earning over Rs 50 crore came down to two from three. Sun Network promoter Kalanithi Maran and wife Kavery Kalanithi are the only ones who have consistently earned Rs 50 crore or more in each of the four years. Naveen Jindal of Jindal Steel and Power, who topped the list four years ago with Rs 73.4 crore, fell out of the top 10 with a remuneration of Rs 14.79 crore in 2014-15. Those who have stayed on the top 10 list in 2014-15 include Pawan Munjal (Rs 44.63 crore) Kumar Mangalam Birla (Rs 44.56 crore) and Munjal's late father Brij Mohan Lall (Rs 44.20 crore) and brother Sunil Kant (Rs 42.59 crore).

 

Lupin's Desh Bandhu Gupta, Onkar S Kanwar of Apollo Tyres, and Divis Labs' founder Murali Krishna Divi were others leading the list. In the year Jindal fell out of the list, his elder brother Sajjan came in at number 10 with a remuneration of Rs 35.28 crore. In this group, the Marans and Kanwar drew their entire remuneration in salary and Birla, a non-executive chairman in many of his firms, earned in commissions while the others drew a combination of both. The number of directors showed an increase in all other income ranges. In the Rs 40-50 crore range, there were five directors against one, in the Rs 20-40 crore range, the number went up from nine to 14.

Among non-promoter directors, A M Naik of Larsen & Toubro led with Rs 27.31 crore followed by D Bhattacharya of Hindalco (Rs 21.6 crore) and N Chandrasekaran of Tata Consultancy Services (Rs 21.28 crore). Y C Deveshwar of ITC was at Rs 13.85 crore. Mukesh Ambani, chairman of Reliance Industries, earned Rs 15 crore and came in at 33 in the overall list. Adi Godrej, Rahul Bajaj and Nusli Wadia came in at 43rd, 61st and 203rd, with remunerations of Rs 13.4 crore, Rs 11.47 crore and Rs 5.2 crore, respectively.

Among independent directors, those who earned over Rs 1 crore in 2014-15 were O P Bhatt (Rs 2.75 crore), R A Mashelkar (Rs 2.16 crore), Subodh Bhargava (Rs 2.01 crore), Dharam Vir Kapur (Rs 1.71 crore), Shailesh Haribhakti (Rs 1.66 crore), Ravindra Bhargava (Rs 1.5 crore) and Dipak Chand Jain (Rs 1.11 crore). Most of these directors served on the boards of business groups like the Tatas, Reliance, Birlas and Bajajs.