Boardroom Vs Shop Floor: Boardroom takes it all in corporate India

The divide between boardrooms and shop floors continues to remain wide in the top Indian companies. An analysis of 168 directors of 19 Sensex companies that have reported data showed that 47 of directors earned at least 50 times what a typical employee took home.

Under the new Companies Act, firms are required to disclose the ratio of directors' pay to the median employee salary. FY16 was the second year that companies reported this data. Analysts say the pay ratio disclosures give shareholders more information to take voting decisions.

Of these, 27 directors earned at least 100 times. Among the top 10 with the highest ratio were three from engineering major Larsen & Toubro, two executives each from Lupin and Hero MotoCorp, and one each from Infosys, TCS and ITC.

All these 10 executives clocked over 400 times their median staff salaries. Krish Lakshmikanth, CEO, The Headhunters India, said, "Over the years, we have started following the American model. The disparity between the CXO and median employee's salary has gone up substantially. We have to live with it." Only three among these 10 , D B Gupta of Lupin, who topped the list at 1,317 times, Pawan Munjal (755 times) and Sunil Kant Munjal (715 times) were promoters. There were four new entrants in the top 10 list. These were Vishal Sikka of Infosys, N Chandra of TCS, K Venkataramanan and M V Kotwal of L&T. They replaced the late B M Munjal of Hero, Vinita Gupta of Lupin, Subhanu Saxena of Cipla, and D Bhattacharya of Hindalco from the FY15 list.

 

The professionals who took home the highest proportion are A M Naik of L&T (1005 : 1), Vishal Sikka of Infosys (935: 1) and Kamal K Sharma of Lupin (757 :1). Y C Deveshwar of ITC, Chandra, Venkataramanan and Kotwal were the other professionals in the top 10, who earned 400-650 times their staff's salaries. Five out of the six directors who retained their place in the top 10 saw their ratios increase last year.

The pay ratio of Lupin's Gupta rose to 1,317 times from 1,168 times. While Lupin's median salary inched up from Rs 3.2 lakh per annum to Rs 3.4 lakh, Gupta's pay cheque went up from Rs 37.58 crore to Rs 44.78 crore. His colleague Kamal Sharma's pay cheque rose from 516 times to 757 times. Naik's ratio jumped to 1,004 times from 454 times in FY15. L&T's median pay was double that of Lupin's at Rs 6.6 lakh .

The Munjal brothers' pay ratio rose from around 600-630 times to over 700 times each. This is despite Hero MotoCorp's median employee pay being among the highest at Rs 7.6 lakh.

The only director whose ratio fell was Deveshwar. It fell from 439 last year to 417 this year. ITC's median pay was around Rs 3.2 lakh.

In comparison, in the US, the ratio of the CEO to average worker pay was 373:1 in 2014, according to AFL-CIO's Executive PayWatch. In 2014, CEOs of the S&P 500 Index companies received, on an average, $13.5 million (Rs 90 crore) in total compensation, about 10 times the number Nifty directors received in FY15.