The occupiers of the corner office at the country’s biggest blue-chip companies have a reason to cheer even as firms grapple with slowdown in the global markets and high inflation that has impeded demand. The median pay for Sensex companies’ leaders jumped 31.2% to at least a five-year high of ₹17 crore in 2022-23, showed a Mint analysis of data from the annual reports of these 30 firms. This was despite a mere 9.1% growth in the aggregate net profit of the 30 firms. The compensation here refers to that of the executive head in each company, which could be the chief executive, chairperson or managing director.

“The compensation has risen from a low base as 2021-22 was a muted year from a growth perspective and shareholders were also not comfortable with CEOs taking large compensations [during the pandemic]," said Shriram Subramanian, the founder and managing director of corporate governance advisory firm InGovern Research Services. In comparison to the pre-covid period, the median remuneration of executive heads has shot up from ₹11.8 crore in 2018-19, recording a 44.2% growth.

All this while, workers' pay trailed. The average increase in the median employee remuneration in these companies (where data was available) was around 9.7%. There were a few outliers like Larsen & Toubro Ltd and Tech Mahindra Ltd that saw a rise in employees’ compensation notwithstanding a pay cut at the top level. Meanwhile, the total costs on employees other than executive heads increased 14.8% (note that this doesn’t reflect salary changes as it also depends on changes in workforce size).

Head Honchos

The typical remuneration of executive heads steering the firms includes components such as salary, bonus, perquisites and stock options. While the overall compensation structure has largely remained stable for some years, top bosses have pocketed big pay packages through employee stock options (ESOPs) with a run-up in stock prices.

Among the leaders running the major Indian firms, Thierry Delaporte, the managing director and CEO of Wipro Ltd, earned the heftiest pay cheque of ₹82.4 crore in 2022-23, which included a salary of ₹9.6 crore, allowances amounting to ₹3.6 crore and a variable pay of ₹10.7 crore. This was followed by another IT peer, Salil Parekh, the managing director and CEO of Infosys Ltd, who took home ₹56.5 crore: he earned a fixed salary of ₹7.1 crore, while perquisites on account of stock options exercised totalled ₹30.6 crore. “Companies should reward their CEOs more for growth and as long as it is performance-linked, it is fine," Subramanian said. The compensation levels in the higher echelons of public-sector firms trail those at their private peers: The heads of state-run firms such as NTPC Ltd and Power Grid Corp. of India Ltd earned just a notch above ₹1 crore, while the chairman of State Bank of India, India’s largest lender, drew ₹37 lakh in 2022-23.

Bridging the Gap?

Meanwhile, there were some encouraging trends as the average wage gap between top executives and employees in many companies came down—in some cases substantially. Out of the 23 Sensex companies with data available for both 2021-22 and 2022-23 (this excludes Reliance Industries Ltd and Kotak Mahindra Bank Ltd, where the executive heads didn’t draw a salary), 12 saw a decline in their head-to-median-employee pay ratios. This includes JSW Steel Ltd, whose chairperson earned 629 times the median employee—compared to 1,859 times in 2021-22. At Tech Mahindra, the ratio declined from 1,189 times to 467 times, while this ratio came down from 670 times to 378.5 times at Larsen & Toubro.

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