Tata Sons will pay N Chandrasekaran as much as Rs 14.4 crore a year in salary and bonus, its board has decided as the new chairman gets into the driving seat of the $103 billion salt-to-software group.
Chandrasekaran will get a basic salary of up to Rs 4.8 crore a year with an additional variable component of 200%, or Rs 9.6 crore, based on his and the company’s performance, according to the board resolution, a copy of which ET has seen. In addition to these, he is eligible to get commission from the company.
In his previous job, as the chief executive of Tata Consultancy Services, Chandrasekaran had earned Rs 25.6 crore in fiscal 2016 and an additional Rs 10 crore as part of a one-time special bonus the company announced that year. The payment included commission.
Cyrus Mistry, the former Tata Sons chairman who was fired by the board in October last year, earned about Rs 16 crore in salary in the fiscal 2015, according to most recent figures available, compared with the Rs 21.28 crore that Chandrasekaran got that year at the group’s software services unit.
Tata Sons does not comment on such matters, the company said in an email
Tata Sons, the investment holding company of the Tata Group, owns shares in more than 100 Tata companies, including 29 publicly listed ones that have a combined market capitalisation of about $116 billion.
“Basic salary of Rs 20 lakh per month, up to a maximum of Rs 40 lakhs per month,” the document on the board resolution, signed by Tata Sons chief operating officer FN Subedar, said, referring to the chairman’s remuneration. “If the board of directors considers it appropriate, an incentive remuneration not exceeding 200% of the basic salary as maybe declared by the board, in its entire discretion, from time to time, subject to such approvals as may be necessary” may also be paid, it said.
Annual increment will be decided by the board’s nomination and remuneration committee.
“The executive chairman shall employ the best of his skills and ability and make his utmost endeavours to promote the interests and welfare of the company and its affiliates and to conform and comply with the policies and regulations adopted by the company and all such orders and directions as may be given to him from time to time by the board,” the document said.
Chandrasekaran will be provided up to two cars and drivers for official duties and telecommunication facilities at residence. Other perquisites include medical expenses towards any major illness or hospitalisation for himself, spouse and dependent children, personal accident insurance and club fees.
As per the terms of appointment, Chandrasekaran will cease to hold offices at the Tata Group and stop being a board member of Tata Sons if he ceases to the executive chairman of the holding company. He will also stop being chairman of group companies.
These terms are particularly significant in the backdrop the power struggle between Tata Sons and Mistry. The former chairman had refused to step down from the chairmanship of listed Tata companies and had to be removed as a director of Tata Sons through a special meeting of its shareholders. Ratan Tata, who took over as the interim chairman after Mistry was removed, had to rely on Tata Sons’ shareholding and the support of other shareholders to remove him from these boards.
“Upon ceasing to be the executive chairman of the company: Chandrasekaran shall forthwith cease to hold offices held by him in the company and its affiliates without compensation for loss of office and he shall forthwith resign trustee of any trust connected with the company,” the document stated.
The agreement between Chandrasekaran and the company may be terminated by either of the party giving the other six months’ notice or the company paying six months’ salary in lieu of notice, it said.