The National Stock Exchange (NSE) is these days enjoying the benefits of a virtual monopoly position and this has brought with it substantial rewards for its senior management. NSE’s consolidated net profit for FY09 stood at a whopping Rs750 crore, compared to Bombay Stock Exchange’s (BSE) Rs212 crore.
Now here is a look at how these riches have made life sweeter for the top management at NSE. Some 1.5% of NSE’s consolidated net profit is what its MD, Ravi Narain and deputy MD, Chitra Ramkrishna earned between them in FY09. If you include the earnings of J Ravichandran, director (F&L) and the company secretary, VPs and AVPs, the figure comes to Rs22.58 crore, or 3% of consolidated net profit.
Ravi Narain is now being given a three-year term extension, which will keep him at the helm till 2013. His total compensation last year was a whopping Rs6.89 crore (excluding perks and first class air travel), Ms Ramkrishna’s compensation touched Rs4.21 crore. Compared to them, BSE MD & CEO Madhu Kannan earned Rs 1.6 crore and MCX-SX MD Joseph Massey received Rs 1.39 crore.
Take a look at the proposed break-up of the compensation package of the two NSE heads for FY10. Ravi Narain’s gross salary per month is Rs13.875 lakh and Ms Ramkrishna’s is Rs8.75 lakh, with performance linked pay subject to a maximum of 60%. The actual percentage is not in the public domain. The perquisites for both add further to these numbers—they are entitled to accommodation and club membership fees, details of which are not provided. Medical allowance and Leave Travel Allowance are at the rate of one month’s salary per annum. Plus there are the usual company maintained car with driver, telephone expenses and leave benefits.
NSE has vigorously maintained its near-monopoly position. This is evident from its recent introduction of zero transaction cost in currency derivatives and interest rate futures and cross margining. NSE is a market leader in both cash and futures segments with nearly 70 per cent and 98 per cent market share, respectively. BSE, on the other hand, is still struggling to maintain its 30 per cent market share. NSE’s recent move to reduce trading costs in futures and options (F&O) and cash segments by 10 per cent may further hurt BSE’s and Multi Commodity Exchange’s (MCX) revenues and force them to revise their strategies.