The COVID-19 pandemic didn’t spare the top honcho of Hindustan Unilever, India’s largest FMCG company, in terms of remuneration.
The annual pay package of HUL chairman and managing director Sanjiv Mehta dropped 21 percent to Rs 15.4 crore in FY21 from Rs 19.42 crore in FY20.
Mehta was the highest-paid CEO in the FMCG sector last year. It remains to be seen who will take that spot this year, with Britannia, Dabur, Marico and ITC yet to release their annual reports.
CEOs of other FMCG companies fared better. Nestle managing director Suresh Narayanan’s remuneration climbed 6.3 percent to Rs 17.19 crore in calendar year 2020 from Rs 16.17 crore in 2019. Nestle follows the January-December financial year.
Tata Consumer Products CEO Sunil D’Souza, who joined the company in April last year, was paid Rs 10.49 crore in annual remuneration compared with Rs 4.3 crore paid to his predecessor Ajoy Misra in FY20.
The remuneration package includes salary, allowances and perquisites, contribution to retiral funds, long-term incentives and stock options, as per the company’s annual report.
D’Souza’s salary was 239 times higher than the median salary of Tata Consumer employees. Mehta’s was 122 times higher than the median salary of HUL employees, while Narayanan’s was 137 times higher, according to the annual reports of these companies.
Company performance and culture
FMCG companies fared better than those in other industries because many of their products are considered essential.
HUL reported an 18 percent growth in annual turnover to Rs 45,311 crore in FY21, while net profit in this period also rose 18 percent.
However, according to HR experts, CEO compensation is linked not just to a company’s performance and market benchmarks but also its culture.
“When juniors have taken a pay cut, it does not look good if the top honcho gets a hike. Compensation committees will consider this when they decide on the salaries of the executives,” said Aditya Mishra, CEO of CIEL HR Services.
In the case of Tata Consumer, the company needed to offer an attractive compensation package to rope in D’Souza, who led Whirlpool India and previously worked in several leadership roles at PepsiCo.
“Considering that the company is in a growth phase at the moment, the choice of leader is very critical and hence it had to offer a good package as a talent acquisition strategy,” said Mishra.
CEO salaries set to soar
Overall, the pandemic hasn’t had much impact on the salaries of Indian CEOs. Top honchos in the country are likely to get a 6 percent salary increase in 2021, according to a report by global professional services firm Aon. This compares with a 1.4 percent decline in 2020.
Aon said the pandemic hasn’t had a drastic impact on sectors such as IT/ITeS, consumer goods and pharmaceuticals and they continue to do well.
As per Aon’s 10th Annual Executive Reward Survey in India, which was conducted among 504 companies from more than 20 industries, the median compensation for a Sensex company CEO stood at Rs 12.92 crore, while that of private companies was Rs 3.63 crore. For an owner-promoter CEO, the median pay package was Rs 15 crore.
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