Remuneration of ceos

REMUNERATION OF CEOs

Presented By: Adarsh Badonia

Divya Acharya

Divyesh Bohra

Mayur Bhakre

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….???

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.

Executive Compensation

Looking at:

Pay

Bonuses

Performance

Company makeup

What is Executive Compensation?

Core Compensation= Base Pay & Bonus

Short term Incentives

Stock Options

Fringe Compensation

Basis of Remuneration of CEOs:-

Qualifications and Experience of the candidate.

Benchmarking

Job evaluation

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.

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

Who Sets Executive Comp?

Different for Each Company

Compensation Consultants

Compensation Committees

Board of Directors

Shareholders

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

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

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

Are CEOs Overpaid ?

TOP 10 Paid CEOs in INDIA

Kalanithi Maran

Annual Salary: Rs 56.25 crore

Kavery Kalanithi


Naveen Jindal


Kumar Mangalam Birla


Pawan Munjal


Brijmohan Lall Munjal


Sunil Kant Munjal


P R Ramasubrahmaneya Rajha


Shinzo Nakanishi


Vishal Sikka

CEO, Infosys

Salary: Rs 30 crore

Least Paid CEOs in INDIA

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.

Conclusion

Executive Compensation is different

Much more than just salary

Always a debatable topic

Ever-growing issue with the current economy

THANK YOU !!

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

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%20NBER.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/

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 Feldstein September NBER.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/

Remuneration of ceos

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