The Tata Group of Companies initiated the cost-cutting measures with the chairman of Tata Sons and CEOs of all operating companies taking an estimated 20% cut in compensation. This is a first for the company. The move is aimed at leading by example, motivating employees and organizations, and ensuring business viability at a time when the COVID-19 has impacted the economy and company’s profits, badly.
The first company to announce the cut was TCS, the group’s most profitable company, for its CEO Rajesh Gopinathan. CEOs and MDs of Tata Steel, Tata Motors, Tata Power, Trent, Tata International, Tata Capital, and Voltas, among others, will have their compensation reduced. Top officials close to the development said the cut would primarily be in current year bonuses.
CEO remuneration at the top 15 Tata Group companies rose about 11% in FY19 from FY18 on average compared with a 14% jump in FY18 over FY17. Barring TCS, no other unit has published the FY20 annual report so far. However, the data is not strictly comparable as some CEOs joined during the financial year.