Corporate Governance & Remuneration of CEOs

1. REMUNERATION OF CEOs
Presented By: Adarsh Badonia
Divya Acharya
Divyesh Bohra
Mayur Bhakre

2. Topics for Discussion
 How much is the average salary of a CEO (in India and International markets)
 Are CEO’s always overpaid?
 How CEO’s remuneration plays an important role in Transparent Corporate
Governance?
 Does excessive pay for less-skilled CEOs signal a breakdown in corporate
governance?
 Whats your view….???

3. INTRODUCTION
 The most important factor between an Employer-Employee relation is Salary.
Compensation planning is one of the crucial aspect of modern times, where
competition is fierce and talent is scarce. Effective Compensation planning is
inevitable in order to attract and retain the best talent.
 Governance mechanism that seeks to align the interests of managers and
owners through salaries, bonuses, and long term incentive compensation,
such as stock options.

4. Executive Compensation
 Looking at:
Pay
Bonuses
Performance
Company makeup

5. What is Executive Compensation?
 Core Compensation= Base Pay & Bonus
 Short term Incentives
 Stock Options
 Fringe Compensation

6. Basis of Remuneration of CEOs:-
 Qualifications and Experience of the candidate.
 Benchmarking
 Job evaluation

7. Chief Executive Officer (CEO) Salary
 A Chief Executive Officer (CEO) earns an average salary of Rs 3,324,027 per
year. Experience strongly influences income for this job. The highest paying
skills associated with this job are Strategic Marketing, People Management,
Business Strategy, Strategy, and Marketing Management. Most people in this
job have more than five years' experience in related jobs.
 The median expected annual pay for a typical Chief Executive Officer in the
United States is $748,805 so 50% of the people who perform the job of Chief
Executive Officer in the United Sates are expected to make less than
$748,805.

8. Remuneration of CEOs
 Chief Executive Officers (CEOs) of public companies are routinely perceived
to be overpaid and their boards are perceived to provide poor or limited
oversight. These perceptions have three typical components: (1) CEOs are
overpaid and their pay keeps increasing;
(2) CEOs are not paid for performance; and
(3) boards are not doing their jobs as monitors

9. Who Sets Executive Comp?
 Different for Each Company
 Compensation Consultants
 Compensation Committees
 Board of Directors
 Shareholders

10. Board of Directors
 Is it fair for Board of Directors to determine salary?
 “Boards are often quite friendly with the CEOs and find it hard to impose large
decreases in compensation on their friends”
 Boards should usually be made of outsiders to avoid much conflict
Executive Compensation and Shareholder Value

11. Reasoning
 Board of Directors feel exec’s deserve high salary
 Doing good job in hard times
 Doing more work to manage in a bad economy

12. How is pay measured?
 There are two ways to measure CEO pay:
 The first is estimated or grant-date pay. This includes the CEO’s salary, bonus,
the value of restricted stock, and the estimated value of options issued that
year.
 The second measure is realized pay. This includes the CEO’s salary, bonus, the
value of restricted stock, and the value of options exercised that year

13. Are CEOs Overpaid ?

14. TOP 10 Paid CEOs in INDIA
 Kalanithi Maran
Annual Salary: Rs 56.25 crore
 Kavery Kalanithi
Annual Salary: Rs 56.24 crore
 Naveen Jindal
Annual Salary: Rs 54.98 crore
 Kumar Mangalam Birla
Annual Salary: Rs 49.62 crore

15.  Pawan Munjal
Annual Salary: Rs 32.80 crore
 Brijmohan Lall Munjal
Annual Salary: Rs 32.73 crore
 Sunil Kant Munjal
Annual Salary: Rs 31.51 crore
 P R Ramasubrahmaneya Rajha
Annual Salary: Rs 30.96 crore
 Shinzo Nakanishi
Annual Salary: Rs 30.90 crore
 Vishal Sikka
CEO, Infosys
Salary: Rs 30 crore

16. Least Paid CEOs in INDIA

17. How CEO’s remuneration plays an important
role in Transparent Corporate Governance?
 Academic research shows that executive pay is not mainly driven by job
demands or pay for performance.
 Since the 1970s CEO pay has risen by 686 percent.
 Executives involved in many of the largest corporate collapses in American
history were extraordinarily well-paid.
 CEO greed has been shown to be related to a host of negative outcomes.

18. Conclusion
 Executive Compensation is different
 Much more than just salary
 Always a debatable topic
 Ever-growing issue with the current economy

19. THANK YOU !!
It is not necessary for all men to be great in
action. The greatest and sublimest power is
often simple patience.

20. REFRENCES:
 http://www.livemint.com/Companies/1ByVEuyR0TDXqvbDnTHz8J/Who-are-Indias-
lowestpaid-CEOs.html
 http://www.rediff.com/business/slide-show/slide-show-1-special-tech-5-highest-
paid-indian-it-ceos/20140703.htm#3
 http://www.sify.com/finance/gallerylisting/category/corporate.html
 http://www.gsb.stanford.edu/insights/when-ceos-are-paid-bad-performance
 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2134208
 http://www.nber.org/feldstein_lecture_2012/Kaplan%20Feldstein%20September%2
0NBER.pdf
 http://www.macleans.ca/economy/money-economy/global-ceo-to-worker-pay-
ratios/
 http://www1.salary.com/Chief-Executive-Officer-Salary.html
 http://inequality.org/corporate-governance-pay-performance-greeds-good/