PSU Executive Pay Hike : Some Details.

The recommended hike ranges between 57 per cent and 379 per cent.

Over 210,000 executives in estimated 240 central public sector undertakings are in for a bonanza with a pay revision committee recommending a massive hike in their annual cost-to-company. The hike ranges between 379 per cent at the highest level and 57 per cent at the lowest across companies and levels.

This is assuming the maximum possible payout an executive can get. The award, if accepted, would mean that government servants, particularly defence personnel, would be paid far less in comparison even if one takes into account the recent hike recommended by the Sixth Pay Commission.

The second PSU pay revision committee, headed by former Supreme Court Justice M Jagannadha Rao, submitted its recommendations today to Minister of Heavy Industries and Public Enterprises Sontosh Mohan Dev.

"We are giving more authority to the companies. They can earn more profit and can share it with their employees," he said. The report has been sent to the Prime Minister's Office and the finance ministry. After it is examined, a final proposal will be put up for Cabinet approval. The process could take three-six months.

Shorn of variable components like risk pay and performance-related pay, the effective pay hike works out to between 25 per cent and 40 per cent, according to SM Dewan, director general, Standing Conference of Public Enterprises. "This is a paradigm shift in the government's thinking on running a business enterprise. It does not put us on a par with private sector companies, but it is a very good beginning," he added.   PSU GRAVY TRAIN No of CPSUs CMD Directors E5 E0 E/P E/P E/P E/P CategoryA+ 11 10.89/52.20 (379.33%) 10.35/36.96 (257.10%) 6.96/15.92 (122.98%) 3.8/7.66 (101.57%) Category A 45 10.89/41.76 (283.47%) 10.35/34.21 (230.53%) 6.96/12.69 (82.32%) 3.80/6.23 (63.94%) Category B 51 10.35/38.7 (273.91%) 9.13/29.28 (220.70%) 6.96/13/48 (93.67%) 3.8/6.97 (83.42%) Category C 52 9.13/29.28 (220.70%) 8.36/21.42 (156.22%) 6.96/12.79 (83.76%) 3.8/6.35 (67.10%) Category D 57 8.36/24.96 (198.56%) 8/19.56 (44.50%) 6.96/12.18 (75%) 3.8/5.98 (57.36%) Figures in Rs lakh/ annum are the total cost-to-company, inclusive of basic, risk pay, all perks and performance related pay.These amounts are the maximum payable. Figures in bracket are the % increase over existing annual CTC    E0: Entry level; E5: Mid level; E/P: Existing/Proposed The revised salary structure is proposed to come into effect from January 1, 2007.  The proposed pay structure seeks to reduce the disparity between public sector executives and their private sector counterparts and introduce a performance-based compensation culture.

In another far-reaching recommendation, the award calls for complete delinking of public sector and government pay scales. PSU employees are proposed to get much more than government officials.

For instance, the chairman and managing director of a company like ONGC, NTPC or Bharat Sanchar Nigam Ltd is proposed to be paid Rs 52.20 lakh a year, much more than the annual compensation of Rs 15 lakh (inclusive of all allowances and perks) that a secretary in the central government will get if the Sixth Pay Commission award is implemented in toto. On a strictly fixed-pay basis, a public sector chairman and director will get Rs 1.25 lakh a month in category A and Rs 65,000 a month in category D companies. In comparison, a government secretary will be paid a fixed Rs 80,000, while the cabinet secretary will be paid Rs 90,000 a month.

The report also recommends that central PSUs be categorised into five (A +, A, B, C, D) based on turnover, manpower and geographical spread.

"We want total delinking of PSUs from the government as we want them to become profitable and strong," said Board for Reconstruction of Public Sector Enterprises Chairman Nitish Sengupta, who was a member of the committee.

The pay will be split into two components, basic pay and risk pay, with the latter depending on categorisation, profitability and the executive's grade. Loss-making firms will not be required to shell out risk pay.

Pay panel's other recommendations

Employee stock options, linked to performance pay Performance-related payout amounting to 40-200 per cent of basic pay Risk pay of Rs 1,100 to Rs 25,000 per month New pay scale of Rs 65,000 - 75,000 of E-10 in A+ companies Sick companies to be allowed pay revision (without risk pay or variable pay) if they make cash profit Central PSUs not making cash profits to be examined by the Board for Reconstruction of Public Sector Enterprises CMDs and directors of sick central PSUs which have seen a turnaround will retire at 60 No upper limit on gratuity Separate fund for post-retirement medical treatment and to meet emergency needs of those who have retired Revision of pay for non-unionised supervisors to be decided by board of directors Retirement benefit of 30 per cent of basic pay, which includes CPF, pension, gratuity and post-retirement medical benefits Source : Business Standard.  Report of 2nd Pay Revision Committee For Executives of CPSEs Latest Office Memorandum on PSU executive pay hike.