Ambani, chairman of Reliance Industries Ltd., will take home 150 million rupees ($3.3 million) in salary and a share of profit for the year ended March 31, compared with 440.2 million rupees a year earlier, the company said in a statement in Mumbai yesterday. The Ambani family, which owns 49 percent of the company, will also get a dividend payout of about $216 million.
The 52-year-old Ambani’s move preempts any government attempt to enforce rules regarding pay. Corporate Affairs Minister Salman Khurshid this month asked companies to refrain from paying “vulgar” salaries to their chief executives, according to Press Trust of India. Leaders from the Group of 20 nations last month said they plan to take steps to curb pay of bankers whose risk-taking triggered a global recession.
“This is a gesture to show shareholders that the company is thinking about them,” said Asish Bhattacharyya, coordinator of the Centre for Corporate Governance at the Indian Institute of Management in Kolkata. “You are also appeasing the government and signaling to the market that you care about costs.”
Governments across the world are prompting companies to cut executive pay. Bank of America Corp. Chief Executive Officer Kenneth Lewis won’t receive a salary or bonus for 2009, a decision based on advice from U.S. government pay supervisor Kenneth Feinberg. Lewis had a base salary of $1.5 million for the past three years.
He also has retirement benefits of about $125 million accumulated in 40 years at the company.
Li Ka-shing
Billionaire Li Ka-shing, Hong Kong’s richest man, was paid only a director’s fee of HK$50,000 ($6,451) by Hutchison Whampoa Ltd., according to the company’s annual report in April.
The salary component of Ambani’s total pay increased 25 percent to 15.9 million rupees, according to yesterday’s statement. Reliance’s net income fell 22 percent to 152.9 billion rupees in the year ended March 31.
A plan by India’s most valuable company to pay shareholders dividend of 13 rupees a share means the Ambani family will get about 10 billion rupees, or 3.3 percent more payout than last year.
Billionaire Brothers
Mukesh’s estranged younger brother Anil Ambani on Sept. 22 said he will forego salary and commission from five of his group companies. Anil’s annual salary is about 300 million rupees, according to the Economic Times.
The Ambani brothers, India’s richest resident billionaires, split the business founded by their father Dhirubhai Ambani in 2005.
Mukesh, who lives with his family in Sea Wind tower in south Mumbai on separate floors from Anil’s family, is also building a new $2 billion, 27-story tower, some 10 kilometers from Sea Wind.
Reliance Industries lowered the commission payable to Mukesh in accordance with limits set by shareholders, according to the statement. Mumbai-based Reliance will also set the salaries of executives using a “capped structure method” instead of basing them on earnings, the company said.
Mukesh Ambani, a chemical engineer from the University of Bombay, is ranked seventh on Forbes’ 2009 ranking of the world’s billionaires with a net worth of $19.5 billion.
Bloomberg
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