In the country, the pay and perks for the man holding the top job — Chief Executive Officer or Managing Director — naturally vary from company to company.
A random selection suggests that presidents of banks are the most handsomely rewarded lot.
Managing directors and CEOs at multinational firms and large local profitable companies also have little to complain about, but the heads of public sector companies and family owned businesses generally —though not always — grumble about the tight-fisted policies of their boards.
Although, most company bosses write seven digit cheques for themselves, they still eye their peers in banks with a mixture of envy and jealousy.
For financial year 2015, President of United Bank Limited earned a sum of Rs 127m; MCB Rs 86m; HBL Rs 75m; Bank Alfalah Rs 97m while the President of the National Bank of Pakistan received an aggregate Rs 71m, including managerial remuneration of Rs 42m.
What could be the cause of the wide variation from bank to bank? “At most banks, the pay and perks of the president is performance based, termed ‘pay for performance’”.
On average, a bank president could be presumed to earn between Rs 70m to Rs 100m a year. And he went on to disclose that most banks do not show what really amounts to the icing on the cake: Bonuses. “Bonuses are paid at 50 to 100pc of the yearly pay package”, but where results fell short of around 80pc of the targets, presidents also had to forego bonuses.
In addition to managerial remuneration, most banks and large firms also offer house rent, utilities, medical leave and reimbursements; free use of bank’s cars, household equipment, post retirement benefits and free membership of clubs. All of which makes a fabulous amount compared to the pocket money that a large number of small and medium sized local company boards pay to the CEOs running their firms.
A random selection of multinationals shows that Nestle Pakistan gave the CEO Rs 81.1m for the company earned profit after tax of Rs 8.7bn in 2015, while the largest pharmaceutical firm in Pakistan GlaxoSmithKline Pakistan, rewarded Rs 54m to its CEO in 2014.
Attock group of companies’ chairman, Ghaith R Pharaon, a Saudi business tycoon holds the majority shares in Pakistan Oilfields Limited (POL). The company posted profit after tax at Rs 7.2bn in the latest year and handed out Rs 21.4m to the CEO.
Bestway Cement — the country’s largest cement company by capacity with 55.4pc shares held by Bestway (Holdings) Ltd, UK — recorded earnings of Rs 11.9bn, and the CEO was paid Rs 24m in managerial remuneration without including bonuses and other benefits.
A sample of the pay scale of state-controlled firms is provided by the largest oil and gas exploration and production company in the country, Oil and Gas Development Company (OGDC) of which the controlling stake of 67.5pc vests with the government. The company earned Rs 60bn for the year and the CEO was paid a remuneration of Rs 39.4m, almost a half of the average pay scale of a bank’s CEO.
Although many top men of public sector entities value things other than monetary compensation, such as the public spotlight, yet the yearning among other people employed to do the same kind of work in other entities, is understandable. “What the chief of a major bank makes in four days, most of us get after toiling throughout the month”, one CEO of an independent power plant grumbles.
Two examples of family-controlled entities could be Nishat Mills, the largest composite textile mill in the country. For 2015, the company earned Rs 3.9bn in profit and its CEO was paid Rs 28.9m as remuneration along with free housing facility.
The country’s largest sugar mill, J.D.W Sugar, 26.6pc of whose share are held by the businessman turned politician Jahangir Khan Tareen, made Rs 1.5bn in profit in 2015 and paid the company CEO the generous sum of Rs 102m including a bonus of Rs 24m.
Interestingly, as long as they hold the reins of their companies, the top bosses may be poles apart in terms of pay and perks; but on departing — whether voluntarily or not — both carry away bounties.
Some years ago when a top corporate boss bade his Islamabad-based company goodbye, he was given a hefty managerial remuneration, tied to another package in lieu of ‘compensation for loss of office’.
Warren Buffet, the universally acclaimed investment guru, once remarked: “Getting fired can produce a particularly bountiful payday for a CEO. Indeed, he can ‘earn’ more on that single day, while cleaning out his desk, than an American worker earns in a lifetime of cleaning toilets”.