Pay and perks of corporate bosses, by D. Hussain
KARACHI, April 28: Six years ago, when the chief executive of the Hub Power Company Limited had stood out as Pakistan’s highest paid corporate boss earning a sum of Rs36 million in aggregate remuneration and benefits, other corporate ‘fat cats’ eyed him with a mixture of envy and jealousy.
Numerous CEOs at publicly traded companies are now employed on a seven-digit salary per month.
In general, managing directors and chief executives at multinational firms and large local profitable companies earn approximately Rs11 million a year.
It is mandatory for listed companies to disclose ‘remuneration paid to directors and executives’ in their annual reports. Selected at random, the CEOs at Pakistan Petroleum Limited (PPL), Fauji Fertilizer Company Limited (FFC) and Orix Leasing Company Limited were seen to have received and identical sum of Rs11 million in managerial remuneration and other benefits. But that number is nearly four times the average of Rs3 million received by men at the head of a public company in 2001.
Bank presidents are understandably highly rewarded. President of country’s largest bank, National Bank of Pakistan (NBP) earned Rs32 million for the year ended Dec 31, 2006, which included bonus of Rs17 million. His counterpart at the MCB Bank received Rs22 million, including bonus of Rs8 million.
Siemens (Pakistan) Engineering Limited remunerated CEO with a sum of Rs26 million, including Rs5.2 million marked as ‘share based payments’.
Pakistan State Oil (PSO) reported just around Rs6.2 million as the MD’s pay package, including Rs4.4 million in managerial remuneration. That, doubtless, ought to be for only a part of the year as people on top jobs changed during the year.
The pay and perks for the man holding top job in a company are not even across the board. A CEO at the Pakistan’s largest cement producing company is seen to be disbursed Rs5 million a year. But that is fabulous amount compared to the pocket money that a large number of company boards pay to the CEOs running their firms.
Small, local and unprofitable companies offer as little a year as Rs0.4 million or under Rs40,000 a month or even a measly sum, such as Rs200,000, equal to Rs17,000 per month (mainly in poorly run, loss-making textile companies). But even such CEOs should be comforted by the knowledge that they still are drawing four times more than Rs51,000 a year or Rs4,250 per head per month of an average Pakistani (just in case the prime minister’s figure of US$850 per capita income in Pakistan is to be believed!).
A sponsor (‘seth’ in local dialect) of a company who his CEO considers as tight-fisted reasoned: “There has to be a connection between executive pay and corporate performance. In a vast majority of companies, where the CEO or MD is expected by the board to prove his worth through performance, the yearly pay package could be settled between Rs2.5 and Rs3.6 million — equivalent to Rs0.2 to Rs0.3 million per month. On the lower side, workers in same companies, earn as less as Rs36,000 a year-equal to one-hundredth of the boss’ pay. ”
There are also rare cases of profitable and scores of loss yielding firms where the top man draws nothing by way of remuneration. Such free-serving CEOs are often the members of families who have controlling stakes in those companies.
In addition to managerial remuneration, most big sized banks and large multinational firms in Pakistan also offer house rent, utilities, medical leave and reimbursements; free use of bank’s cars, household equipment and free membership of clubs. So are the corporate fat cats licking up all the milk and honey? A bank president frowned on such a question and asked to compare their pay packages with those of corporate bosses in London or New York.
“Have you seen a bank president in Pakistan ride a six-door chauffeur-driven car or fly in corporate jets?” he asked.
As long as they hold the reins of their companies, the top bosses may be widely at par in terms of pay and perks. But on departing — whether voluntarily or on being fired — both carry away bounties. On June 25, 2001, when a top corporate boss bade his Islamabad-based company goodbye, he was blessed with managerial remuneration and benefits to the tune of Rs44.7 million. The icing on the cake was Rs35.3 million received as “compensation for loss of office”.
All of that made a cool sum of Rs80.4 million. Interestingly, Warren Buffet — the richest man in the world, and a universally recognised investment guru of the last century — once made a cute remark: Getting fired can produce a particularly bountiful payday for a CEO. Indeed, he can “earn” more in that single day, while cleaning out his desk, than an American worker earns in a lifetime of cleaning toilets”, he said and added as an afterthought: “Forget the old maxim about nothing succeeding like success: Today, in the executive suite, the all-too-prevalent rule is that nothing succeeds like failure.”
, here we start:
