The chairman of Tata Sons along with the CEOs of all the Tata Group’s constituent companies will take approximately 20% deduction in salaries as part of cost-cutting measures due to COVID-19. This is reportedly the first time in the history of the company that such an action is being taken.
Industry insiders told Economic Times that the move is aimed at setting a benchmark for employees and organisations and to maintain business viability.
TCS was the first to announce a cut in compensation for its CEO Rajesh Gopinathan. TCS is the Group’s flagship and most profitable company.
Executives have indicated that the CEOs and MDs of Tata Steel, Tata Motors, Tata Capital, Tata International and Voltas, among others, will be taking a cut in compensation. Officials close to the development have told ET that the deduction would primarily be in the current year’s bonuses.
These are times never before experienced in the history of our group and it calls for some tough measures to protect businesses, a top group CEO told ET on condition of anonymity.
“We will do all that it takes to ensure right leadership with empathy. As a culture, the group has always ensured employees down the line are protected as much as can be,” the CEO added.
Each company will be reviewing its HR policy and cash flow management, Tata Sons chairman N Chandrasekaran had told ET earlier.
While indicating a compassionate approach, each company will take a decision individually to ensure a viable business, Chandrasekaran had told the publication.
A Tata Sons spokesperson told ET that the decision on remuneration rests with the remuneration committee of the board of Tata Steel and so it may not be apt to pre-empt a way forward in the matter, while declining to comment further on the issue.
Meanwhile, CEO remunerations across the top 15 Tata Group companies rose by around 11% in FY19 compared to FY18 on average.
Tata Sons chairman Chandrasekaran received a total compensation of Rs 65.52 crore for FY19, which was 19% higher than in FY18.
Considering the business aspect, Tata Group sales of 33 listed companies increased by 10% to Rs 7.52 lakh crore in FY19, out of which three companies viz. Tata Motors, Tata Steel and TCS, accounted for almost 82% of total sales.