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