Diageo's Indian-origin CEO Gets Pay Cut; No Hike This Year Too

Leading spirits maker Diageo's Indian-origin CEO, Ivan Menezes, has seen his pay package decline in his first year on the top post and would not get any salary hike in the second year as well.

Mr Menezes, who was promoted as CEO of UK-based Diageo Plc in July last year, was paid total remuneration of 7.77 million British pounds (about Rs 80 crore) in the financial year ended June 30, 2014.

This was way below his maximum entitlement of 12.67 million British pounds for the fiscal 2013-14, and also lower than his total pay package of 8.26 million British pounds in the previous fiscal 2012-13 when he served as Chief Operating Officer, shows Diageo's latest annual report.

Due to sluggish financial performance in some key markets, the top executives of the company, including the CEO, could earn less than 10 per cent of the maximum performance- linked bonus they were entitled to during the last year.

Diageo's total sales declined by over 8 per cent to 13.98 billion British pounds in 2013-14, while profits fell by about 15 per cent to 2.18 billion British Pounds.

Mr Menezes said that India would become one of the largest markets for Diageo in the coming year and provide a major platform for future growth. The company, whose major brands include Johnnie Walker whisky and Smirnoff vodka among others, has acquired majority control in leading India's leading spirits maker United Spirits Ltd (USL) from Vijay Mallya-led UB Group.

Diageo also said its remuneration committee has decided to freeze Mr Menezes' salary in the current financial year.

"After careful consideration of Ivan Menezes' total remuneration positioning and the salary budget for all employees in the UK, the Committee decided that no salary increase would be awarded to the Chief Executive in October 2014," the company said.

The overall salary increase budget for the current financial year ending June 30, 2015 has been decided to be 2.8 per cent of base salary for the business in the United Kingdom and 3 per cent in North America.

The Annual Report showed that Mr Menezes' total fixed pay actually increased in his first year as CEO to 1.8 million British Pounds, from about 1.34 million British Pounds in 2012-13 as COO, but performance-related long-term incentives more than halved from 6.1 million British pounds to about 3 million British Pounds.

The company said that its Remuneration Committee assessed the performance of Ivan Menezes, along with other top executives, against their specific objectives and concluded that "the objectives were partially met".

The overall level of performance achieved resulted in an AIP (Annual Incentive Plan) award equating to 18.2 per cent of base salary for Mr Menezes.