Mumbai, Feb. 22: Indian Hotels Company Ltd (IHCL) - the Tata group's hospitality venture - and its US subsidiary will pay a combined annual remuneration of around Rs 17 crore, including a one-time joining bonus, to managing director and chief executive officer Rakesh Sarna.

Sarna had joined the company in September last year.

Sarna had spent around 35 years with Hyatt Hotels Corporation. Before joining IHCL, he was the group president of Americas and executive vice-president at Hyatt Hotels Corporation, which has 398 properties.

He takes over at a time hospitality companies such as IHCL are facing challenges both in India and overseas. Globally, the economic slowdown is having an adverse impact on the business, while an increase in new capacity has led to stiff competition and brought down the average room rates in India.

IHCL has sought shareholders' approval on Sarna's appointment for a period of five years and for his remuneration. Besides being the managing director and CEO of IHCL, Sarna will be appointed as an employee of International Hotel Management Services Inc., USA, a wholly owned subsidiary of the company, for five years.

IHCL will pay Sarna an annual basic salary of $150,000 and a living allowance of $360,000 to support the transition for this role.

He will also be entitled to a performance-linked bonus of $510,000.

IHCL told shareholders that the maximum performance-linked bonus payable to him would be $765,000. It will be subject to the achievement of certain performance criteria and other parameters decided by the board.

Sarna will also be covered under a long-term incentive plan, which aims to achieve value creation through retention and continuity of leadership.

Under the plan, Sarna will be paid $480,000 per annum for the first five years in two tranches.

The first tranche ($1,440,000) will be paid at the end of this year and the rest on the completion of five years. No amount will be paid if he leaves the company before completing three years.

Besides perquisites and benefits, Sarna will be entitled to a one-time joining bonus of $300,000 along with the first month's remuneration to "compensate on a one-time basis for the loss of remuneration due to transition from previous organisation'', IHCL said.

In the case of IHMS, Sarna will receive a total remuneration of around $7,80,996 that includes basic salary, allowance, performance-linked bonus and a long-term incentive plan.