Ever heard of a Rs. 50-crore compensation package? That’s what V Vaidyanathan, former managing director (MD) and CEO of ICICI Prudential Life Insurance, has been offered to shift loyalties to Future Capital Holdings, the finance company promoted by Kishore Biyani of Big Bazaar/Pantaloons fame.
As a sign-on bonus, Vaidyanathan got 20 lakh warrants worth Rs47.40 crore, which are convertible into Future Capital shares 18 months from now or February 2012.
The package is R. s10 crore more than the annual pay cheque of MD and chairman of Sun TV, Kalanithi Maran, who was India’s highest-paid CEO last year, and two times Mukesh Ambani’s annual salary in 2009.
Vaidyanathan’s compensation package, when he was executive director in ICICI Bank in 2008, was Rs. 1.4 crore, not including the 125,000 shares of the bank which he got as stock options in 2008.
Those shares alone were worth R. s11.75 crore as of Monday.
He was allotted the shares of Future Capital Holdings at Rs. 237 each on Monday. He can convert them into equity shares in his own name by paying Rs237 per share in February 2011 or 18 months from now as a joining bonus.
What it means is that every rupee’s rise in the price of Future Capital share from Rs 237 will be his real gain. In fact, each rupee’s increase will add Rs20 lakh to Vaidyanathan’s wealth.
On Monday, the Future Capital share surged 11.83% to Rs279.75. It means Rs85 lakh (Rs279.75-Rs237 into Rs20 lakh) has already been added to Vaidyanathan’s wealth — a week before he joins the company on August 10.
Any fall below Rs237 after 18 months would mean the warrants are not worth converting into shares. It is a performance-linked booty. Biyani refused to comment, but said Vaidyanathan will not have to pay any money for the shares now.
“He is entitled to purchase or rather convert the warrants to shares at a later date and sell them,” said a source.
Vaidyanathan’s move is symptomatic of the quantum leap in pay packages offered to people in senior positions of late. “There is a huge talent crunch at the top level. So, when companies spot an individual with talent and experience, they are willing to pay any amount to get him on their rolls,” Siddarth Raisurana, executive director of search firm ABC Consultants, said.
Mohands Pai, head of human resources at Infosys Technologies, said the company hired about 10 people in the Rs75 lakh-1 crore salary bracket in the last quarter.
Kris Lakshmikanth, chairman and MD of Bangalore-based Head Hunters India, said million dollar packages are given to individuals who have 15-plus years of experience, including international exposure.
“Compensation is dictated by industry demand and what the company can bear,” Sonal Agrawal, CEO (India), Accord Group, said. “In the past five to 10 years, companies have scaled up in size and in terms of revenue and global footprint. They offer salaries to very good people in sync with the growth of the company and the market,” K Sudarshan, managing partner, EMA Partners International, said.