- Head of Reliance Industries Mukesh Ambani has decided to forgo all of his compensation as the company announced wage cuts and postponement of performance-related wages
Head of Reliance Industries Mukesh Ambani has decided to forgo all of his compensation as the company announced wage cuts and postponement of performance-related wages for its employees in the hydrocarbon sector, which was severely hit by poor demand in the Covid-19 pandemic.
Prime Minister Narendra Modi has urged industry not to cut jobs because of the crisis created by the pandemic and the subsequent nationwide shutdown, even as businesses struggle. RIL, India’s most respected firm, has agreed to cut costs by, among other steps, raising salaries to workers to meet challenges faced by its companies.
In addition to Ambani, the board of directors, including executive officers, members of the executive committee, and senior executives, will also reimburse 30-50 percent of their salaries, the organization said in a letter to employees.
“The hydrocarbon sector was adversely affected by a decline in demand for refined products and petrochemicals. Naturally, this has placed pressure on a hydrocarbon company needing optimization and cost management on all fronts. The situation demands that we maintain a razor-sharp eye on running expenses and fixed costs and all of us need to commit to making this happen, “said Hital Meswani, Executive Director, in the letter.
In the hydrocarbon sector salaries were left unchanged for those earning less than Rs 15 lakh a year. Even those with a salary greater than Rs 15 lakhs per annum would have a fixed pay cut of 10 percent.
RIL has also postponed annual cash rewards and benefits related to results that are usually paid in the first quarter of a fiscal year. To date, the wage reduction and deferment of variable components are restricted to the hydrocarbon business; no such announcement has yet been made concerning other businesses. An ET query to RIL had yet to get a reply.
“We will be closely monitoring the economic and market climate, constantly reassessing a response to the situation and striving to increase our business’ earning potential. The lockdown time has also given us many opportunities to reorganize and digitize our business process to produce major improvements in our productivity, performance, and cost. We must welcome these incentives together and strive to return our level of compensation to normalcy, “Meswani said.
In 2018-19, Ambani’s salary was Rs 15 Crore, unchanged for the eleventh consecutive years. He will still be liable for heavy dividend payment for his shareholding in the energy company even though he forgives his compensation.
As part of its plan to become debt-free by 2021, the company today has a board meeting to explore a possible rights issue of shares, it’s first in 30 years.