Tech Mahindra Ltd has set an employee compensation record with a total remuneration of Rs 179.5 crore (USD 29 million) last financial year to Vineet Nayyar, a 77-year-old former IAS officer who switched to the corporate world three decades ago.
Nayyar, who retired from executive role last August but remains on the board of India's fifth-largest software services firm as vice chairman, drew bulk of the record compensation (Rs 177.8 crore) from the value of stock option. His salary and company's contribution to provident fund was at a modest under Rs 2 crore.
In the process, he surpassed the previously known highest compensation to an executive by an Indian firm. In the year ended March 31, 2015, Tech Mahindra itself paid a whopping Rs 165.5 crore to CP Gurnani, its managing director and CEO. Nayyar himself was paid a not too modest figure of Rs 119.9 crore in FY2014-15. Both received a large chunk of this compensation through value of stock options.
The same year, Bharti Group's Akhil Gupta, had also drawn large compensation, as he exercised stock options worth Rs 87 crore.
Prior to FY2014-15, the highest paid executives of Indian public companies pocketed around Rs 60-67 crore in any given year. Sun TV's husband-wife duo Marans, JSPL's Naveen Jindal etc had pocketed such sums.
There is no uniform disclosure practice for the value of ESOPs being granted or exercised. Several top bankers bag a good chunk of their pay packets through such stock options. However, since last year some firms started clearly quantifying the value of such stock options exercised in their annual report.
According to Kris Lakshmikanth, founder and CEO of executive search firm Headhunters India, it is now mandatory for listed companies to provide cost to company (CTC) information for directors.
He said a majority (70 percent) of the NIFTY 50 companies have provided this information and this percentage will only increase in the future.
The disclosures also shine a fresh light on how the top bosses of Indian IT behemoths are being rewarded.
“Most software and e-commerce companies' directors and chief executives' salary can be compared to investment bankers’ today,” said Lakshmikanth.
An email query sent to Tech Mahindra on its disclosure policy related to the value of stock options to directors, did not elicit any response. -VCC Circle