In­dia Inc pay gap: CEOS earn up to 1200 times of av­er­age staff

The Northlines - - BUSINESS -

New Delhi:

A huge pay gap be­tween CEOS and other em­ploy­ees at Indian com­pa­nies has come to the fore, with the big­gest listed blue-chip firms dol­ing out to their top ex­ec­u­tives salary pack­ages of up to 1,200-times of their me­dian em­ployee re­mu­ner­a­tions. An anal­y­sis of re­mu­ner­a­tion dis­clo­sures made by top listed com­pa­nies form­ing part of the blue-chip in­dex Sen­sex -- un­der di­rec­tions of the cap­i­tal mar­kets reg­u­la­tor Sebi -- shows that the pay pack­ages of se­nior- most per­son­nel such as CEOS and ex­ec­u­tive chair­men con­tinue to re­main high and rose fur­ther at most pri­vate sec­tor firms dur­ing 2016-17.

On the con­trary, the me­dian em­ployee re­mu­ner­a­tion fell or re­mained al­most same dur­ing the last fis­cal, while the ra­tio of the top ex­ec­u­tive’s pay to the me­dian em­ployee re­mu­ner­a­tion re­mained at astro­nom­i­cally high lev­els of hun­dreds- times in many cases.

The pub­lic sec­tor com­pa­nies show a to­tally dif­fer­ent pic­ture with their chiefs get­ting salaries of just about 3-4 times of their me­dian re­mu­ner­a­tions. em­ployee While the rules do not put any re­stric­tions on the com­pa­nies re­gard­ing how much more they want to pay their top ex­ec­u­tives vis-a-vis an av­er­age em­ployee, the Sebi reg­u­la­tions re­quire most listed com­pa­nies to an­nu­ally dis­close var­i­ous re­mu­ner­a­tion ra­tios to help the in­vestors know about salary prac­tices at the firms in which they have in­vested.

How­ever, salaries of top ex­ec­u­tives, es­pe­cially in case of those re­lated to pro­moter groups, typ­i­cally re­quire the ap­proval of the com­pa­nies’ boards, var­i­ous com­mit­tees and share­hold­ers. Be­sides, the com­pa­nies with in­ad­e­quate prof­its need the gov­ern­ment’s ap­proval for any ex­ces­sive salaries paid to their top ex­ec­u­tives.

As per the rules, the re­mu­ner­a­tion payable to any one managing di­rec­tor or whole- time di­rec­tor or man­ager, can­not ex­ceed 5% of the net profit of the com­pany. If there is more than one such di­rec­tor, the re­mu­ner­a­tion can­not ex­ceed 10% of the net profit to all such direc­tors and man­agers taken to­gether.

Among the 30 Sen­sex firms, at least 15 have al­ready dis­closed an in­crease in the ra­tio of top ex­ec­u­tive pay with that of the me­dian em­ployee re­mu­ner­a­tion for 2016-17. Nine of the Sen­sex firms are yet to dis­close these numbers and there­fore the tally may go up. Six Sen­sex com­pa­nies have re­ported some de­cline in this ra­tio and these in­clude Wipro (down from 260 times to 259 times), In­fosys (283 times), Dr Reddy’s Lab (from 312 times to 233 times) and Hero Mo­to­corp (from 755 times to 731 times). The coun­try’s most-val­ued firm Reliance In­dus­tries did not dis­close this ra­tio in its lat­est an­nual re­port pub­lished on the web­site. While its chief Mukesh Am­bani has capped his pay at Rs 15 crore for many years now, the ra­tio was high at 205 times in 2014-15.

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