India's largest airline IndiGo has given its Chief Executive Officer Ronojoy Dutta stocks worth Rs 14 crore under Employee Stock Option Scheme that will accrue to him over the next three years.
The proposal was cleared by the company board on March 6, and will be voted by the shareholders on March 12. The e-voting will end on April 10.
Dutta has been granted 1.85 lakh shares at Rs 765 per share. On March 10, IndiGo's stock ended the day at Rs 1,684 at the Bombay Stock Exchange.
Dutta will get the ESOPs over and above his annual remuneration and bonus. In its communication to the exchanges, the airline said the CEO has been paid Rs 8.2 crore till December 31, 2020, as part of his remuneration for the 2021 financial year. This includes a 'committed bonus' of Rs 3.7 crore, the airline said.
In the 2020 financial year, Dutta took home a salary of Rs 17 crore, which included a bonus of Rs 5.6 crore.
"In most global airlines, the CEO compensation has a stock-based component that encourages long-term orientation and also aligns CEO compensation with members’ interests. Stock-based compensation would encourage better long-term orientation," the airline said.
"To better align CEO compensation with shareholder interests," the airline's Nomination and Remuneration Committee in its meeting on January 22, approved the Rs 17 crore ESOP.
In months following the COVID-19 that had created havoc in the aviation sector, IndiGo - like other airlines - had cut salaries of its employees. Dutta had taken a cut of 35 percent. In its latest communication, the airline didn't specify if the CEO's remuneration till December 31, 2020, reflected this cut.
SpiceJet, the only other listed airline with active operation, Managing Director and Chairman Ajay Singh had taken home a remuneration of Rs 7.2 crore in FY20. He and his family hold a 59 percent stake in the airline.
Jet Airways, which suspended operations in April 2019, is also listed.
The CEO perks
As the CEO of the country's largest airline, Dutta is entitled to some perks. These include:
# Medical and life insurance, and use of company car.
# Up to 8 business class tickets for travel to and from the US annually which could be used by him (Dutta is a US citizen), his spouse or his dependent daughter. Such allowances will be over and above the annual salary payable to him.
# A company-leased apartment.
# Concessional/ free confirmed tickets in all flights operated by the company, which can be availed by him, his spouse and dependent children less than 21 years of age at the time of travel, provided that the total number of such tickets shall not exceed 50 in each financial year and such tickets to be availed for the purpose of leisure travel only.
An industry veteran who worked extensively in the US aviation industry, including 20 years at United Airlines, Dutta had joined IndiGo in 2019, initially as a consultant. He was appointed as the CEO in January 2020. He has a term of four years.