Gimme more: Sign-on pay hits 8 figures

PUNE/NEW DELHI: Impatience pays, sometimes in the form of multi-crore cheques. As India Inc scrambles for high-octane talent, the most-wanted executives are increasingly charging on-the-spot premium from potential recruiters. Sign-on bonuses—a signing amount offered by a company poaching an executive from his present job—which made their way into the Indian recruitment market recently, are now exploding both in value and volume.

Sample this: Bharat Parajia, H Nemkumar, Aniruddha Dange and Vasudev Jagannath—all roped in by brokerage firm India Infoline from CLSA—were reportedly paid sign-on bonuses of Rs 11 crore each. Lehman Brothers recently brought in three to four hot-shots as business heads with packages ranging from $1.4-2 million. Their sign-on bonuses, on an average, came to 50% of the package, i.e. about Rs 3-4 crore each.

Sources say one of them is Jayanta Banerjee, who has been roped in from ICICI Venture as the new country head for Lehman Brothers’ private equity (PE) fund in India. The New York-based firm also hired Pankaj Vaish as head of equities and fixed-income markets and Surojit Shome as head of investment banking early this year.

Explains Mumbai-based HR firm Cerebrus Consultants director Verda Pendse, “Sign-on bonuses have become an essential tool for start-ups and companies on an expansion mode as they require key mass of personnel.”

However, what’s becoming a bigger trend this year is the surge in the number of people being offered multi-crore cheques. Besides, the sign-on umbrella has now widened to include even middle-level executives. Says Watson Wyatt country head Anita Belani, “It’s a combination of talent shortage and negotiation skills of an individual that determine the sign-on bonus.”

The instances of sign-on bonuses in the PE space are higher as executives forego a part of the “carry”. This is basically their “cut” in the profit that the PE fund makes on its investments, but cannot be encashed as they are not part of the team when the fund exits the investment. On the other end, Mr Banerjee is learnt to have forgone his “carry” in the new job that he was entitled to at ICICI Venture.

Sign-on bonuses vary between a mix of upfront payment and deferred payouts. Says head-hunting firm ABC Consultants CEO Shiv Agarwal, “As much as 50-60% of the sign-on bonus represents the compensation for foregoing payouts such as retention bonus at the existing job.”

Traditionally, the banking and financial services sector has been the biggest paymasters when it comes to sign-on bonuses, followed by telecom, IT and consultancy. Payouts in the Rs 1-2 crore bracket at the top end of the spectrum are pretty common. Nevertheless, other sectors are catching up too.

For instance, a CXO-level position of a BPO company was recently filled with a sign-on bonus of $500,000 or Rs 2.2 crore. Similarly, another CXO-level executive from a large MNC pharma company is learnt to have joined a smaller company with a sign-on bonus of Rs 50 lakh.

According to head-hunters, senior positions, including some in the actuary and underwriting wings of newcomers in the insurance business such as Bharti AXA, were filled with sign-on bonuses varying between Rs 1-2 crore each. This apart, top honchos hired by new entrants into the retail sector were also handed out crore-plus cheques.

Some of the others who have got big fat cheques to switch over include Sameer Nair, former chief operating officer of Star India, who was roped in by rival media firm NDTV. Says Emmay HR CEO Monisha Advani, “A decade ago the trend was limited to senior or key positions only, but today sign-on bonuses are fairly common in the case of mid-management upwards.”

For instance, Dilshad Master is learnt to have been appointed COO of V&S Broadcasting, a subsidiary of UTV Broadcasting, with a sign-on bonus of about Rs 20 lakh. Similarly, the head of human resources at confectionery major Perfetti pocketed a bonus ranging between Rs 10-20 lakh.

The deputy chief financial officer at GlaxoSmithKline got Rs 20 lakh. Brand managers at Reckitt Benckiser have received joining bonuses of Rs 2-4 lakh while Coca-Cola’s director (technical) got Rs 5-10 lakh.