Mumbai: As part of efforts to reduce expenses, the Tata group will cut the salaries of all CEOs of Tata Sons’ chairman and associate companies for the first time in their history. The group will cut compensation of these officers by about 20%. Sales commission and bonus etc. are included in the compensation.
The group aims to provide its employees with an example for younger employees. Also to encourage employees and ensure the viability of companies. Sources have given this information.
Tata Consultancy Services (TCS), the group’s flagship and highest-profit company, first announced a cut in the salaries of its CEO Rajesh Gopinathan.
Indian Hotels has already said that the senior leadership of the company will contribute some percentage of its salary in this quarter in this period of crisis.
CEOs and MDs of Tata Steel, Tata Motors, Tata Power, Trent, Tata International, Tata Capital and Voltas will also take less salary. Officials aware of this decision of the company have said that there will be a reduction in the bonus for the current financial year.
A top CEO of the Tata group, on condition of anonymity, said, “There has never been such a time in the history of the Tata group and at this time some tough decisions need to be taken to save the business.” He said, “To ensure the right leadership, we will take all steps with sympathy.” The Tata group’s culture has been to protect the interests of employees as far as possible.
Tata Sons president N Chandrasekaran had earlier told ET that each group company would review its HR policy, revenue plans and cash flow management. Tata Sons and most group companies did not respond to ET’s email on the subject.
The CEO’s remuneration in the top 15 companies of the Tata group increased by an average 11% over FY18 compared to FY18, while FY18 increased by 14% compared to FY 2017.
However, these figures are not hundred percent accurate because some CEOs joined during the financial year. Except TCS, no other entity has published an annual report for FY 2020 so far.
Chandrasekaran received a total remuneration (reward or remuneration) of Rs 65.52 crore for FY 2019, out of which he received a commission of Rs 54 crore on the benefit of Tata Sons. Chandrasekharan’s package in FY 2019 was 19% higher than FY18.
Talking about business, sales of 33 listed companies of Tata group increased by 10% to Rs 7.52 lakh crore in FY19. Three companies – Tata Motors, Tata Steel and TCS – contributed around 82% of the total sales. However, there has been a 20% decline in profits of 33 companies from FY 2018 to FY 2019.
TCS contributed about Rs 32,340 crore to the profits of the Tata group, after which Tata Steel stood second in profit and the company made a profit of 18,218 crore. TCS CEO Rajesh Gopinathan’s remuneration declined 16.5% to Rs 13.3 crore in the financial year ended March 3.