Puneet Chhatwal, Managing Director and CEO of Tata group-promoted Indian Hotels Company (IHCL), who assumed office nearly two years ago, received a pay package that is substantially lower than his predecessor Rakesh Sarna.
Chhatwal, an alumni of the prestigious INSEAD and who later worked with Carlson Rezidor Hotels as its Chief Development Officer, took home a package of Rs 6.02 crore in FY19 as per detail published in IHCL’s annual report.
This despite the company turning in a profit under Chhatwal. The company clocked a profit of Rs 286 crore and Rs 100 crore in in FY19 and FY18, compared to a loss of Rs 63 crore and 231 crore in FY17 and FY16, respectively. Chhatwal joined IHCL in November 2017.
In comparison, Sarna, who was IHCL's MD and CEO before his abrupt exit in FY18, was paid 30 percent more than Chhatwal at Rs 7.93 crore (not including the long term incentive). IHCL clarified that Chhatwal (like Sarna) stands to receive the long term incentive which is essentially a performance bonus to be paid in 2020-21.
“This payout will be based on the company’s performance for the past two years”, a response from IHCL stated.
Sarna even received a shareholder approval for maximum remuneration of Rs 18.4 crore, making him one of the most valuable CEOs within the Tata Group, next only to the then MD and CEO of Tata Consultancy Services (TCS) N Chandrasekaran.
Even hospitality veteran Raymond Bickson, who held the same position as Chhatwal, received a pay package that was double compared to Chhatwal during the final year of his employment.
In FY15, Bickson, who was Sarna’s predecessor, received Rs 12.43 crore in salaries, as per details shared in the annual report. Bickson faced a backlash from shareholders for his pay package in at least two annual general meetings. Both Bickson and Sarna left IHCL before the end of their tenures.
Each of the three senior executives had an international exposure to global hospitality companies. While Bickson worked with Rafael Group Hoteliers and Regent International Hotels, Sarna was the Group President – Americas at Hyatt Hotels Corporation.
They were brought on board with the broader idea of taking Taj and other brands beyond Indian shores and tap the Indian diaspora settled abroad.
With growing competition back home with large-sized hospitality companies -- InterContinental Hotels Group, Marriott International, Hilton Worldwide Holdings, Hyatt Hotels Corporation, Wymdham Hotels & Resorts, Accor, Radisson Hospitality, et al -- lining up to launch new properties, the focus for IHCL has shifted to regain its domestic market share.
The Mumbai-headquartered company has been on a cost cutting spree since the last couple of years.
The operator of brands such as Taj, Vivanta by Taj, SeleQtions and Ginger has sold hotels and apartments, exited management partnerships, focused on turning asset light, cut its loan exposure, returned to profitability and improved its room occupancy in the face of strong competition from global hospitality firms.
Recently, IHCL partnered GIC, Singapore’s sovereign wealth fund, to set up a three year Rs 4,000 crore investment fund to acquire properties in luxury, upscale and upper upscale segments. The aim of the fund is to acquire distressed assets, which come at a value that is less than the market average.
This is an updated copy. The previous version carried remuneration packages that included performance-based incentives
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