TCS Corporate Sustainability Report 2010-11 - Tata Consultancy ...

Aspect How
Succession planning
project level.
Remuneration Policy
Business sustainability requires consistency in management vision and minimization of
impact when there is a leadership change. Therefore, succession planning is an important
element in ensuring smooth transitions. At TCS, succession planning occurs at every level
– at the corporate level, at the business unit level, at the account level and even at the
At the highest level, succession planning of senior management is directly reviewed by the Executive Committee of
the Board. Business/Unit Heads are invited to Board Meetings from time to time to give presentations to the Board to
update them. This provides an opportunity for the Board to interact with Senior Executives periodically and assess
values, competencies and capabilities to help them identify suitable internal successors and provide feedback.
In these last four decades, TCS has gone through two CEO-level transitions, the last one in October 2009. The seamless
manner in which that transition took place is evidence that the Company’s succession planning is working well.
The Company follows a compensation mix of fixed pay, benefits and Economic Value
Added Analysis based variable pay. Individual performance pay is determined by business
performance and the performance of the individuals measured through the annual
appraisal process.
Compensation for Non-Executive Directors on the Board consists of:
n Sitting Fees for attending Board meetings and meetings of Committees of the Board, to the tune of Rs 10,000 per
meeting.
n Commission, as decided by the Board of Directors and approved by Members at the Annual General Meeting,
within the ceiling of 1% of the net profits of the Company as computed under the Companies Act, 1956. The
commission is distributed amongst the Non-Executive Directors based on their attendance and contribution at the
Board and certain Committee meetings, as well as the time spent on operational matters other than at meetings.
n Reimbursement of any out-of-pocket expenses incurred by the Directors for attending meetings.
Remuneration of the Managing Director and Executive Directors consists of a fixed component (salary, benefits,
perquisites and allowances) and a performance-liked variable component (commission).
The Remuneration Committee decides the annual increments within the salary scale approved by the Members, and
the commission payable to the Managing Director and the Executive Directors out of the profits for the financial year
and within the ceilings prescribed under law. The commission amount is based on the company’s performance as well
as that of the Managing Director and each Executive Director, measured along several sustainability-linked criteria
discussed in this report.
Details of the compensation paid out to Members of the Board in 2010-11 are disclosed on Page 64 of our Annual
Report.
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