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Biocon, Wipro promoters take less pay than CEOs

Biocon CMD took home a remuneration of Rs 1.55 crore compared to CEO and joint managing director Arun Chandavarkar, who was given a remuneration of Rs 2.66 crore.

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Biopharmaceutical major Biocon's chairperson and managing director Kiran Mazumdar-Shaw took almost half the remuneration the company paid to the its chief executive officer during 2014-15, according to the company's annual report.

During the year 2014-15, Biocon CMD has taken a remuneration of Rs 1.55 crore compared to CEO and joint managing director Arun S Chandavarkar, who was given a remuneration of Rs 2.66 crore. John Shaw, the vice-chairman of the company, was paid Rs 1.47 crore during the year, as given in the annual report 2014-15.Chandavarkar was appointed CEO and joint managing director in April 2014 and was also inducted in the board. He was earlier the chief operating officer of the company.

The remuneration shown in the annual report refers to total payout to everyone including fixed pay, perquisites valued as per the Income-tax Act and benefits.

The Biocon promoter's decision can be compared to that of Wipro where the promoter and chairman Azim Premji takes a lower remuneration compared to its CEO, T K Kurien. While Premji's remuneration during 2014-15 stood at Rs 4.78 crore, the same for T K Kurien stood at Rs 9.11 crore. This is after there is a drop of 53% in remuneration of Premji from Rs 10.24 crore in 2013-14, while an increase in 39% for Kurien from Rs 6.57 crore.

Such examples are quite rare in India Inc, where promoters generously reward themselves with higher remuneration year after year. In certain cases, even when the company reports a negative growth in its topline and bottomline, promoters seek an increase in their remuneration.

Chandavarkar's remuneration is 76.9 times the ratio of remuneration of each director to the median remuneration of employees, whereas that of Mazumdar-Shaw is at 44.9 times, as per the company's annual report.

According to a company spokesperson, the compensation of CMD and vice-chairman as reflected in the annual report is less than some of the senior management members, including the CEO, as they are all executive professionals whose compensation is aligned with industry benchmarks. “As promoters of the company, Kiran and John have chosen to take a lower compensation as they also have additional income by way of dividends which is not reflected in the compensation number mentioned in the annual report,” the spokesperson added.

However, there is a drop in salaries of both CMD and CEO by 5% and 16% respectively during the year.

“The drop in CMD and CEO’s compensation for this year is explained in the report by way of a note that mentions that there was a one-time bonus provided to them in the previous year (2013-14), which is not there this year, hence their salary is lower this year,” said the spokesperson.

 
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