ET Intelligence Group: The compensation of India Inc’s top 100 senior executives other than promoters holding executive positions has seen a sharp increase, thanks to better than average increase in salaries and higher payouts of commission or bonus. The average compensation of the sample increased by 12.1% to Rs 9.8 crore in FY17.
Further, the median salary of the top senior executives is on average 243 times higher than the average salary for employees, according to data from Capitaline and annual reports. The pay ratio of the CEO and an average worker’s salary in India was the second-highest in the world after the US, according to Bloomberg. The median remuneration of Indian employees was Rs 5,65,748 in FY17, an increase of 8.5% from the year before. The average of global CEO salary is around $3.6 million (Rs 23.6 crore), while it is $1.5 million (Rs 9.76 crore) for Indian CEOs.
AM Naik, group chairman at India’s largest infrastructure company Larsen & Toubro, was the highest paid key management professional, if employee stock option plans (ESOPs) are excluded, in FY17. Naik took home Rs 78.91 crore in remuneration, an annual gain of 19.3%. Nearly half of his total compensation was due to retirement benefits. His remuneration was 1,102 times the median remuneration of the employees at the engineering giant.
Om Prakash Manchanda, CEO at Dr Lal PathLabs, was next on the list with a payout of Rs 33.20 crore in FY17, an increase of 12% year-onyear.
In his case, perks account for nearly 90% of the total compensation.
Under Section 17(2) of Income-Tax Act, if the employer provides facilities to employees such as the value of rent-free accommodation, company car with chauffeur, clubhouse memberships, these will be a part of employees’ compensation under perks.
N Chandrasekaran, the former chairman of TCS, was paid Rs 30.16 crore in FY17. Of this, 83% was in the form of commissions.
The compensation of senior executives typically consists of four elements: basic salary, perks, retirement benefits and commissions.
In FY17, commissions paid to senior executives accounted for 40-83% of their remuneration.
The accompanying table on salaries of the top 100 senior executives’ sample does not include ESOPs as stock options are not issued by many companies in India.
Companies, like TCS, don’t issue stock options to their employees. However, if ESOPs are included, CP Gurnani, CEO at Tech Mahindra, topped the chart with a total compensation of Rs 150 crore, including ESOPs. The impact of the ESOP was most visible in case of Vishal Sikka, former CEO of Infosys. The cash component of Sikka’s salary dropped by 67% to Rs 16 crore in FY17, while total compensation with ESOP fell to Rs 45.11 crore from Rs 48.41 crore a year ago.
The number of senior executives (including promoters) working with the BSE 500 companies who earned more than Rs 1 crore salary increased by 43 to 848 in FY17 from the previous year. There were 104 senior executives in the BSE 500 companies with remuneration of more than Rs 10 crore.
(With inputs from Rajesh Mascarenhas)