Stakeholders Empowerment Services (SES), a non-profit corporate governance research and advisory initiative, is up in arms about promoter pay. “It is nobody’s case that all directors perform the same functions or that they should be remunerated equally. But it is difficult to justify such arge differences,” says SES founder J.N. Gupta in an interview to Business World.

SES gives the example of Apollo Tyres. Chairman Onkar S. Kanwar gets a package of Rs 24 crore per annum. His son Neeraj Kanwar takes Rs 11 crore home. The family owns 40 per cent of Apollo. Onkar Kanwar annexed 7.73 per cent of the net profit of the company, while peer group directors had a remuneration of just about 1 per cent of profits.

Elsewhere you will find some promoters like Mukesh Ambani of Reliance and S.D. Shibulal of Infosys taking pay cuts when the company’s performance has not lived up to expectations. This is truer of professional executives; in Cadbury, for instance, managing director Anand Kripalu took a salary cut of 35 per cent down to Rs 7.14 crore in 2012.

But there are people who bother about featuring in the highest-paid executives lists. You won’t find too many pay cuts here. (There are exceptions; for Mukesh Ambani, the thrill of being at the top has apparently palled especially as brother Anil is nowhere in the picture.) For the record, the highest paid in India in 2012 were Navin Jindal, Kalanithi and Kavery Maran of Sun, Kumar Mangalam Birla and the Munjal duo from Hero MotoCorp.

“At that end of the spectrum, salaries are really about egos,” says Mumbai-based HR consultant D. Singh. “You are not talking about your bank balance and investments. You can’t talk about your chalet in Switzerland because the government has put restrictions on funds outflow to purchase them. You are basically into the ‘mine is bigger than yours’ game in very limited company. And, of course, you like your name in newspaper headlines.”

Cutting your pay may also be a way of making it to the headlines. N.R. Narayana Murthy has capped his salary at Re 1 on his return to Infosys. So has Shibulal, the CEO. The first to do so was Lee Iacocca of Chrysler in 1978.

But do people for whom it matters willingly go in for a pay cut? At a media group recently, the CEO met with his star performers one by one.

He told them that the salary bill had to be cut. There could either be an across-the-board cut or 10 per cent of “non-performers” would have to leave. The stars refused to make a sacrifice. Some 15 per cent of the employees have already been sacked and more will be as the HR department discovers that it has a new licence. Even the stars will face the axe one day. Like pastor Martin Niemöller, they will be left to say: “Then they came for me, and there was no one left to speak for me.”

How would the media house survive with no stars and no staff? “Outsourcing,” says the director HR, now aspiring to become CEO.

“Everything can be outsourced today.” He adds on a lighter — but valid — note: “we can even outsource a CEO.” Staffing firms like MaFoi Randstad, Adecco and Manpower offer CEOs on lease.

A Wharton study reports that people are making sacrifices by working reduced hours so that no one loses his job. But the difference between the US and India is that too many people live on the borderline here.

They are like Wilkins Micawber: “Annual income 20 pounds, annual expenditure 19 and six, result happiness. Annual income 20 pounds, annual expenditure 20 pounds nought and six, result misery.”

There are times when it makes sense to take a pay cut (see box). There are times when you are forced to do so – the pink slip vs the pay slip. But don’t volunteer. Says Singh: “In the Indian context, that’s a sign of weakness. If you have to agree, do so after due protest. The family budget is more important than your boss’s bottomline.”

A TIME TO BE BRAVE

Some reasons for accepting a pay cut

When you are making a career change

When you crave work-life balance

When the new opportunity is much better

When it all evens out

When there is something you want more

When striking out on your own

When you have hit the salary ceiling

Source: The Fiscal Times