Enormous gaps in corporate remuneration must pass two key tests

livemint.com:

Subscribe to enjoy similar stories. Even as growing inequality confronts India as a challenge, remuneration trends among large Indian companies are exacerbating worries. While the top leaders of Nifty 500 firms earn staggering sums, as a Mint study finds, what they are paid as a multiple of the median pay of their employees has reached eye-popping levels too.

It exemplifies what many are worried about: India’s lopsided economic emergence. But just how wide is the gap? As reported by ‘Plain Facts,’ the median executive-director-level pay of the country’s 500 biggest listed firms was ₹5.7 crore in 2023-24, up 8.6% from the previous year and 50% over what it was in 2018-19. Poonawalla Fincorp’s managing director Abhay Bhutada tops the earnings list with ₹241 crore in compensation last fiscal year.

Hero MotoCorp’s chairperson and executive director Pawan Munjal is next with ₹109 crore, while Crompton Greaves’s executive vice-chair Shantanu Khosla at third place was paid ₹99 crore, Tech Mahindra’s CEO and managing director C.P. Gurnani received ₹92 crore and Sun TV’s executive chair Kalanithi Maran, placed fifth, got ₹88 crore. The top five make up just 1% of the sample, but double-digit packages figure lower down the order too.

To be sure, it is for a company’s shareholders to determine what its key personnel are paid. If the person at the helm brings a blend of skills, talent and strategic focus that boosts the business and enables it to meet aggressive goals, then the value being generated may well be found to justify large rewards. Much of what top leaders are paid is variable pay, with financial award schemes designed to align their interest directly with the company’s, an added incentive to give the job their very best.