Tata Steel will be doling out significant pay hikes to executive and non-executive directors on its board in the current fiscal, its latest annual report published on Thursday shows.
The company, a part of the salt-to-software Tata Group, intends to pay a total commission of Rs 8.50 crore to ten of its non-executive directors in fiscal 2015, a 36% hike over what it paid in FY14.
The biggest hike, among non-executive directors, will be received by vice-chairman and former managing director B Muthuraman who will be paid a commission of R2 crore in 2014-15, versus R80 lakh in 2013-14.
The commissions payable to other non-executive directors like Ishaat Hussain, Nusli Wadia and Subodh Bhargava are around double of what they got last year. Hussain and Wadia will get Rs 1.10 crore each and Bhargava will get Rs 1.05 crore in FY15. Hussain and Bhargava got R50 lakh each and Wadia got R55 lakh in FY14.
Koushik Chatterjee, group executive director of finance and corporate at Tata Steel will be getting a 26.5% hike in his pay package, including salary, perquisites, allowances and commission. His total remuneration stood at R4 crore last fiscal and will increase to at least R5.06 crore in 2014-15.
Chatterjee is the only executive director on the board of Tata Steel, whose salary figure is strictly comparable between fiscals 2014 and 2015. HM Nerurkar, who was the managing director of Tata Steel for India and South East Asia, retired in September 2013, while his successor TV Narendran was appointed in the same month.
Tata Steel, which was faced with significant headwinds in terms of operating and financial performance in FY13, embarked on a gradual turnaround in the last fiscal. The firm’s consolidated turnover stood at R1.48 lakh crore in FY14, up around 10.31% year-on-year. It reported a net profit of R5,596 crore in the same period, against a loss of R7,058 crore in FY13.
When it comes to paying salaries to top executives, Tata Steel also appears to have learnt from the experience that Tata Motors, one of the conglomerate’s other companies, recently faced.
In the notice to shareholders of the company’s annual general meeting, which forms a part of its annual report, Tata Steel seeks to pass an ordinary resolution for the appointment of TV Narendran as managing director for India and South East Asia. The terms and conditions of remuneration to be paid to Narendran, as specified in the explanatory statement to the resolution, states that even if the company has no, or inadequate profit in any financial year, the company will pay him “remuneration by way of salary, benefits, and perquisites and allowances, bonus/performance linked incentives as approved by the Board and to the extent permitted under the (Companies) Act.”
Narendran’s proposed pay package stands at R4.83 crore, including R4 crore as commission to be paid in the current fiscal.
Earlier this month, the shareholders of Tata Motors had rejected a proposal for the payment of remuneration, in excess of their minimum entitlement, to three executive directors of the company. Tata Motors had to seek the shareholders’ approval through a special resolution (which didn’t garner enough votes to be passed) since the company had “inadequate” profits in FY14.
In his statement to shareholders that is a part of the annual report, Tata Steel’s chairman Cyrus P Mistry said that there were “significant expectations” from the new Narendra Modi-led government to spur investment in infrastructure in the country, thereby providing a fillip to the steel industry as well.
“Steel as a foundation industry will play a significant role in this journey and therefore it is very important for policymakers and the government to facilitate a robust supply side framework as an enabler for a vibrant steel industry in the country,” Mistry said.