Asia’s Richest Man Takes 66% Pay Cut in India Austerity Drive

Oct. 16 (Bloomberg) -- Mukesh Ambani, Asia’s richest man, took a 66 percent pay cut to “set a personal example of moderation” after India’s government called for austerity in salaries of executives.

Ambani, chairman of Reliance Industries Ltd., will take home 150 million rupees ($3.3 million) in salary and a share of profit for the year ended March 31, compared with 440.2 million rupees a year earlier, the company said in a statement in Mumbai yesterday. Reliance’s net income fell 22 percent to 152.9 billion rupees in the year ended March 31.

The 52-year-old Ambani’s move preempts any government attempt to enforce rules regarding pay. Corporate Affairs Minister Salman Khurshid this month asked companies to refrain from paying “vulgar” salaries to their chief executives, according to Press Trust of India. Leaders from the Group of 20 nations last month said they plan to take steps to curb pay of bankers whose risk-taking triggered a global recession.

“This is a gesture to show shareholders that the company is thinking about them,” said Asish Bhattacharyya, coordinator of the Centre for Corporate Governance at the Indian Institute of Management in Kolkata. “You are also appeasing the government and signaling to the market that you care about costs.”

The salary component of Ambani’s total pay increased 25 percent to 15.9 million rupees, according to yesterday’s statement.

India’s per capita gross domestic product rose to a record $724 last year, according to the World Bank.

Billionaire Brothers

Reliance Industries’ plan to pay shareholders dividend of 13 rupees a share means the Ambani family, which owns a 49 percent stake in India’s most valuable company, will get about 10 billion rupees, or 3.3 percent more payout than last year, according to Bloomberg calculations.

Mukesh’s estranged younger brother Anil Ambani on Sept. 22 said he will forego salary and commission from five of his group companies. Anil’s annual salary is about 300 million rupees, according to the Economic Times.

The Ambani brothers, India’s richest resident billionaires, split the business founded by their father Dhirubhai Ambani, in 2005.

Reliance Industries lowered the commission payable to Mukesh in accordance with limits set by shareholders, according to the statement. The Mumbai-based Reliance will also set the salaries of executives using a “capped structure method” instead of basing them on earnings, the company said.

Mukesh Ambani, a chemical engineer from the University of Bombay, is ranked seventh on Forbes’ 2009 ranking of the world’s billionaires with a net worth of $19.5 billion.