Windfall commission perks up income of commodity world CEOs

These chief executive officers (CEOs) from the commodity world may not be making headlines often. But the remuneration earned by each of them will leave you amazed. In most cases, there has been a sharp surge due to a much higher profit linked commission, bringing a windfall for these executives, who also happen to be promoters.

Ravi Jhunjhunwala, the chairman and managing director (CMD) of graphite manufacturer HEG, according to the firm's annual report, took home a remuneration of Rs 433.2 million last year (against just Rs 23.3 million in FY17), thanks to a commission of Rs 410 million against no commission in FY17 as company was making losses. Rising prices and demand for graphite electrode, which finds application in steel making, helped the LNJ Bhilwara Group company report a handsome profit of Rs 10.81 billion in FY18 compared to a loss of Rs 500 million in the previous year.  

The graphite boom also brought a bonanza for K K Bangur, chairman of Graphite India. Bangur’s commission multiplied manifold to Rs 100 million in FY18 from a mere Rs 6 million in the previous year. His total remuneration last year was Rs 100.1 million against Rs 6.16 million in FY17, as profit zoomed to Rs 9.13 billion from Rs 1.12 billion.

P R Venketrama Raja, chairman and managing director of Chennai-headquartered Ramco Cements earned Rs 340 million as remuneration due to a commission of Rs 327.6 million last year. Raja was a director in the company during FY17 and had earned just Rs 480,000 when his father P R Ramasubrahmaneya Rajha was the CMD. Rajha passed away in May 2017. The company had earned a profit of Rs 5.55 billion in FY18.

CEOs of paper companies also had enjoyed a record remuneration last year as profits hit a new high and so did the commission. Harsh Pati Singhania, vice chairman and managing director of leading paper maker JK Paper earned Rs 120 million in commission during FY18 that increased his total remuneration to Rs 193.1 million against Rs 139 million in the previous year. Singhania has the company of S K Bangur, the CMD of Kolkata headquartered West Coast Paper. Bangur’s commission increased 41 per cent to Rs 95.4 million and his total remuneration surged to Rs 111.2 million in FY18 from Rs 86.5 million in the previous fiscal.

Besides Raja of Ramco Cement, Yadupati Singhania of Kanpur-headquartered JK Cement saw his commission expand by 50 per cent to Rs 90 million in FY18 and his total income went up to Rs 172.5 million from Rs 126 million. FY18 also happened to be a great year for the company and it earned Rs 3.42 billion in profit, growing 63 per cent from the previous year.

In most of the above cases, the per cent commission share of CEO in profit is in low single digits but that translates into a several millions. Accordingly, the remuneration of some of these executives is even higher than CEOs who are running comparatively bigger businesses and make bigger profits. Rajiv Bajaj, managing director of Bajaj Auto, for instance, earned Rs 283 million in FY18. The remuneration of the CEO at Royal Enfield maker Eicher was Rs 95.1 million last year. R S Agarwal, the chairman of FMCG major Emami earned Rs 58.64 million last year in remuneration which also included a commission of Rs 25 million. ITC chairman Y C Deveshwar had a remuneration of Rs 298.55 million last year.