When Bill Marriott chose Arne Sorenson over his son John Marriott to take-over as the 3rd CEO of Marriott International, he broke a tradition of sorts. Marriott group started by Bill’s father had only 2 CEOs in the glorious history of Marriott, spanning over 85 years. Bill has four children and he had a wish that one of his children takes-over the reins of this hospitality empire, although not all his progenies were running for this position. Besides the fatherly wish and expectation that his child leads the group after he calls it quits, he also felt that a 'Marriott' would perhaps perceptually convey the promise that Marriott makes to its guests and other stakeholders better.
His eldest son John Marriott came closest to donning this role. However in the end Bill found Arne Sorenson, who worked for the group as the COO, to be fit for the role given his ‘big-picture’ approach and razor-sharp strategic mind. Merit gave way to family tradition and parental affection. Bill Marriott chose an employee over his son as his successor who could best secure the interests of the stakeholders.
His eldest son John Marriott came closest to donning this role. However in the end Bill found Arne Sorenson, who worked for the group as the COO, to be fit for the role given his ‘big-picture’ approach and razor-sharp strategic mind. Merit gave way to family tradition and parental affection. Bill Marriott chose an employee over his son as his successor who could best secure the interests of the stakeholders.
Cut to India, according to a study by proxy advisory firm IIAS, around 25% of BSE-100 companies , which are largely promoter-driven , have the highest pay packages. In fact, for family-owned businesses where multiple family members are on the board, their combined remuneration tends to be on the higher side and in one case constituted almost 70% of the total staff costs.
The study also reveals the high variation between average employee salary and CEO pay (average of 285x and median of 85x). An analysis of the five highest salary paying companies in BSE-100 shows that in the last few years, many of the larger firms such as RIL and L&T have been replaced by smaller ones. Most of these top-paying firms are run by promoters themselves. IIAS find this as a worrisome trend since the CEO remuneration levels should be comparable, irrespective of whether the CEO represents the promoter or is a professional. According to the study, increasingly, controlling shareholders have used the company to steer personal interests sacrificing the interests of the company, mostly through abusive related-party transactions and remuneration.
Clearly the trend in India seems to be opposite to the one that Marriott has chosen. Professionalism seeks to be overshadowed by personal-interest in most of the Indian promoter-run companies. Family and self-interest takes precedence over merit and larger interests of stakeholders.
Is it surprising that if engagement of stakeholders also takes antithetical poles?
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