ICICI Bank offers over 20% salary hike to top management -ET
NEW DELHI: ICICI Bank, India's largest private sector bank, has proposed a pay hike of over 20% to its top management team just months before issue of new bank licences to corporate houses by the Reserve Bank of India.
The board of directors have rewarded Chanda Kochhar, the managing director and chief executive offer of the bank with a 20.75% salary hike to Rs 5.12 crore in 2013. The board has also decided to raise the minimum and maximum range of monthly supplementary allowance for Kochhar to Rs 10-18 lakh from about Rs 8.70 lakh per month.
Other directors have also got pay hikes of over 20%. NS Kannan, the chief financial officer, received a 26.17% hike which is the steepest hike among the top brass at the bank. K Ramkumar, executive director and head human resource at the bank received a 24.78% hike of Rs 3.56 crore.
The salary of Rajeev Sabharwal, executive director and head of the bank's retail banking and rural initiative that's been the driver of profit for the March quarter increased by 20.56% to Rs 3.20 crore. The steep hike comes at a time when the Reserve Bank of India and the government are considering fresh banking licences to select corporates.
"The overall compensation package consists of basic salary, perquisites, retiral benefits, allowances and performance bonus. The Board has approved an increase of 15% in basic salary and allowances, which is the same for all the Working Directors," said ICICI Ban spokesperson. " The perquisites are eligible to be drawn by the employees over a period of time and hence the actual amount paid in a year may vary depending upon the utilisation in that year. The retirals are a function of basic salary. The performance bonus is approved by the Board based on the fixed pay component and various other factors as determined by the Board," said the spokesperson.
"It is all about key talent retention strategy. When organisations give big hikes to certain people at the top level, it is with an intention to hold on to critical talent,'' said Aditya Narayan Mishra, president-staffing at Randstad India. With the new banking licences on the anvil there is obviously a threat of flight of crucial talent and organisations trying to retain them. The hikes to people at the top (when industry average is much lower) is happening because of that," reasoned Mishra.
The tough macroeconomic environment and slow economic growth has forced players in the financial space to restrict the payouts at about 12%. Foreign banks have gone a step forward by not given any hike to its top management for the year. Kochhar has successfully brought the bank out of the consolidation phase and put it back on the growth path. The bank has also in the tough economic cycle managed to contain the non performing loans,'' said a banking analyst with a domestic brokerage.
The timely sale of the Kingfisherexposure to Srei Infrastructure Finance helped the bank recover its dues unlike some of the other banks. This would have definitely helped the top management gain brownie points,'' he added. The bank reported a 21% rise in its March quarter net profit, boosted by treasury gains, retail loans and lower provisions for bad loans, even as its pre-tax profits from corporate business fell.
Its net profit for the fourth quarter of last fiscal was Rs 2,304 crore, up from Rs 1,901 crore a year ago. The bank also proposed to pay Rs 20 a share as dividend.
The board of directors have rewarded Chanda Kochhar, the managing director and chief executive offer of the bank with a 20.75% salary hike to Rs 5.12 crore in 2013. The board has also decided to raise the minimum and maximum range of monthly supplementary allowance for Kochhar to Rs 10-18 lakh from about Rs 8.70 lakh per month.
Other directors have also got pay hikes of over 20%. NS Kannan, the chief financial officer, received a 26.17% hike which is the steepest hike among the top brass at the bank. K Ramkumar, executive director and head human resource at the bank received a 24.78% hike of Rs 3.56 crore.
The salary of Rajeev Sabharwal, executive director and head of the bank's retail banking and rural initiative that's been the driver of profit for the March quarter increased by 20.56% to Rs 3.20 crore. The steep hike comes at a time when the Reserve Bank of India and the government are considering fresh banking licences to select corporates.
"The overall compensation package consists of basic salary, perquisites, retiral benefits, allowances and performance bonus. The Board has approved an increase of 15% in basic salary and allowances, which is the same for all the Working Directors," said ICICI Ban spokesperson. " The perquisites are eligible to be drawn by the employees over a period of time and hence the actual amount paid in a year may vary depending upon the utilisation in that year. The retirals are a function of basic salary. The performance bonus is approved by the Board based on the fixed pay component and various other factors as determined by the Board," said the spokesperson.
"It is all about key talent retention strategy. When organisations give big hikes to certain people at the top level, it is with an intention to hold on to critical talent,'' said Aditya Narayan Mishra, president-staffing at Randstad India. With the new banking licences on the anvil there is obviously a threat of flight of crucial talent and organisations trying to retain them. The hikes to people at the top (when industry average is much lower) is happening because of that," reasoned Mishra.
The tough macroeconomic environment and slow economic growth has forced players in the financial space to restrict the payouts at about 12%. Foreign banks have gone a step forward by not given any hike to its top management for the year. Kochhar has successfully brought the bank out of the consolidation phase and put it back on the growth path. The bank has also in the tough economic cycle managed to contain the non performing loans,'' said a banking analyst with a domestic brokerage.
The timely sale of the Kingfisherexposure to Srei Infrastructure Finance helped the bank recover its dues unlike some of the other banks. This would have definitely helped the top management gain brownie points,'' he added. The bank reported a 21% rise in its March quarter net profit, boosted by treasury gains, retail loans and lower provisions for bad loans, even as its pre-tax profits from corporate business fell.
Its net profit for the fourth quarter of last fiscal was Rs 2,304 crore, up from Rs 1,901 crore a year ago. The bank also proposed to pay Rs 20 a share as dividend.
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