This CEO just said “no, thank you” to his big fat salary6 min readReading Time: 5 minutes
When you think about money, your mind probably arrives at the bank. Yup, banks are packed with billions and trillions of dollars. (not physically, they aren’t just bursting at the seams with banknotes), but where there is a bank, there is always money. So now imagine the money that the people heading those banks must make? That’s right! It’s a lot of money. And now, one of these heads has decided to give up all that money to compensate for his company’s losses due to Covid. Talk about being a team player!
India’s biggest private banks
Before we meet the man that gave up crores of rupees, let’s get you acquainted with some of India’s private banks. Try to match the banks to their logos and discover 5 of India’s biggest banks in the process.
So, now that you’ve discovered India’s biggest private banks and their logos, you’re probably wondering, why aren’t we looking at all banks? As we analyse the salaries of the highest-paid banks in the country, it only makes sense to glance at all banks, isn’t it? Well, private banks pay their top employees at least ten times the amount of money that public banks do! So, it only makes sense to consider only private banks for the purpose of this article.
Aren’t all banks for the public? What’s a private bank?
Here’s a story that’ll help you better understand banks and the way that they function:
X has a company, and it sells bird feed. X sells the birdfeed to her little community and does well. So, X decides that she wants to sell some more birdfeed to people of the entire city. But, there is a problem. X doesn’t have enough money to spend on expanding her store and producing more birdfeed.
Suddenly, she has an idea! Since her company is doing so well, why doesn’t she sell shares and raise money that way? So, she goes to the people of her community and proposes her idea. They can own a part of her company and, in turn, get a share of its profits as the company does better and better.
Chief Executive Officer
Now, since her company is getting so large, she needs someone to run it. She needs to hire a CEO or a Chief Executive Officer. The CEO is in charge of all the company’s big business and financial decisions. So, a CEO could sink or swim a company. X needs to think hard and hire someone great. That means she needs to attract them to her company, and what better way to do that than with money. So, she and her other shareholders (people who bought shares from her) can pick a salary amount and offer it to the person they think best fits the role.
Private and Public Banks
If the government was one of the biggest shareholders, that could mean that they would choose to spend less on just one person and hope that the best person will sign on for their love for the country and public service. If all the shareholders are private, then they can spend as much as they please. Their money belongs to them, and they are not accountable to the taxpaying people of the country.
Most of the shares (more than 50%) of public banks belong to governments, whereas the majority of the shares in private banks belong to private citizens and companies.
So, now that you’re better acquainted with shares, private banks and CEOs, let’s get back to the news.
India’s highest-paid banker CEOs
HDFC Bank: Their CEO, Aditya Puri, made 13.82 crores last year!
ICICI Bank: Their CEO, Sandeep Bakhshi, “voluntarily relinquished” his crores last year. He did this because his company, ICICI Bank, was deeply impacted by the pandemic. However, even though he let go of his regular paycheck, Bakshi made one whole crore in bonus money and other company allowances!! In contrast, the average Indian salary is 3.5 lakhs per year (1 crore makes up one hundred lakhs).
Other top employees of the bank also gave up 10% of their paycheck for the past year.
AXIS Bank: Their CEO, Amitabh Chaudhry, made 6.52 crores last year.
When compared with the banks’ average salary, these CEO’s make hundreds of times the amount of money most other employees do. The paycheck drawn by HDFC Bank executives was the highest at 139 times the average salary of a bank employee. Meanwhile, AXIS Bank’s Chaudhry earned 104 times the average pay, and ICICI Bank executive directors drew 96 times more money than an average employee.
Woah! that was a whole lot of money talk. It’s now time to reflect a little. Do you think it’s fair for one person to make hundreds of times the amount of money another person in the same company makes?
How much money does one person require? Is there a limit to what we want and need?
Are you a team player? Do you make sacrifices so the teams and groups that you are a part of can perform better?
With Excerpts From: Business Standard