The compensation package of the chairman and managing director (CMD) of UTI Asset Management stood at Rs 3.66 crore in 2010-11. This is more than 66 times the pay of Rs 5,57,000 the company’s chief drew in 2004-05.
In comparison, the company’s total employee cost has grown 2.5 times to Rs 148.47 crore during the same period. Last year alone, when the company’s profits fell 19 per cent, the CEO’s pay packet nearly doubled from Rs 1.89 crore in 2009-10.
The rise in executive pay assumes significance as UTI shareholders have been looking for a possible candidate to fill up the corner office for nine months now.
Human resource experts say, while the figure is a little high for public sector top management, it is at the lower end of what CEOs in the overall financial services industry draw. Both, bureaucrats and private sector professionals, are said to be in race for the UTI top post.
The Head Hunters India Ltd CEO Krish Lakshmikanth said: “ For a public sector unit, this is high. This figure is much higher than what bureaucrats and chiefs of PSUs earn. Even for senior officials in the government, like the chief secretary or the cabinet secretary, the CTC might not cross Rs 1 crore.”
But, if one compared the numbers with the salary of CEOs in private sector fund houses, this could be at the lower end, he added.
Managerial take-home remuneration of HDFC AMC stood at Rs 5.57 crore in 2010-11, up from Rs 4.17 crore last financial year, while the ICICI Prudential AMC CEO drew Rs 8.71 crore, compared with Rs 3.48 crore the previous year.
“The figure can go up to Rs 10-12 crore, as 50 per cent of the CTC in private sector fund houses is in variable components, based on parameters like performance, returns to shareholders, etc,” said Lakshmikanth.
The multi-fold rise in UTI chief’s pay packet followed a restructuring exercise initiated by the company’s board in 2007-08. The board had decided to restructure pay package, which was earlier aligned with public sector pay scales.
U K Sinha, who was then the CMD of UTI AMC, got on board T N Radhakrishna as the president and head of human resources in May 2007.
Radhakrishna drew up a plan that brought salaries of fund managers and key officials broadly in line with the salary trend in the overall financial services industry.
Sinha, a 1976-batch IAS officer from the Bihar cadre, retired from government services four years ahead of his superannuation, as the government did not agree to let him continue as the head of UTI AMC beyond May 2008, while continuing to remain in the IAS. From Rs 7.8 lakh in 2006-07, Sinha’s pay had jumped to Rs 2.02 crore in 2007-08. Though the total employee cost rose 44 per cent that year to Rs 101 crore, the fund house was able to attract new talent from the market; Anoop Bhaskar as the head of equity, for example.
However, not everyone’s happy with the restructure. About 600 of the more than 900 officials have recently formed a body, the All India UTI AMC Officers’ Association, and allege that the current management is discriminating against. They allege that when they protested, the committee of executives that runs the administration began transferring staffers at will.
