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JSW Steel, India's leading steelmaker, paid its key managerial personnel 32.9 per cent more in 2014-15, even as average salaries of employees increased only 6.3 per cent.
Chairman and Managing Director Sajjan Jindal saw his total remuneration rising from Rs 18.1 crore to Rs 26.2 crore - an increase of 45 per cent. Other managers saw their remuneration increase around 11 per cent. Total remuneration of Jindal consists of two components - fixed remuneration and the commission of 0.5 per cent linked to the net profit of the company. While his fixed remuneration increased only 10 per cent, his commission increased 74 per cent - from Rs 9.8 crore to Rs 17 crore.
According to annual reports, however, the net profit (profit after tax or PAT) was Rs 1,335 crore in 2013-14 and Rs 2,166 crore in 2014-15, an increase of 62.3 per cent. A spokesperson said for the calculation of managerial remuneration, net profit was taken as Rs 1,954 crore in 2013-14 and Rs 3,405 crore in 2014-15, which is an increase of 74 per cent.
"Section 198 of the Companies Act, 2013, stipulates the manner in which net profit needs to be calculated for managerial remuneration. The increase in commission of Rs 7.3 crore is on account of the increase in net profit of the company," the spokesperson said in an e-mailed response.
The payments are within the overall limits (Rs 1 crore per month and 0.5 per cent of net profit) approved by the shareholders, he added. In 2013-14, Jindal's salary had decreased to Rs 18.1 crore from Rs 20.2 crore in 2012-13, in line with the decrease in company's PAT from Rs 1,801 crore to Rs 1,335 crore.
Seshagiri Rao M V S, joint managing director and group chief financial officer (CFO), saw his pay increase 13 per cent. Vinod Nowal, deputy managing director, Jayant Acharya, director (commercial and marketing), and Rajeev Pai, CFO, got 11 per cent more in FY15. The median remuneration during 2014-15 was Rs 4.9 lakh. Therefore, the ratio of Jindal's remuneration to median remuneration of employees turned out to be 536:1.
