ITC Chairman’s Salary Is 439 Times That of Company’s Median Pay; Mukesh Ambani at 205 Times
Almost a hundred years ago, J.P Morgan, the iconic American investor and banker had said that a CEO’s pay should never exceed 20 times the average worker’s pay. Management Consultant Peter Drucker often shared his 20:1 ratio rule, when it came to salary distribution among the CEO/Chairman and an average worker, “beyond which they cannot go if they don’t want resentment and falling morale to hit their companies.” (Source)
However, it seems that today’s CEOs and Chairman wish for more; and not surprisingly, they even get that.
As per SEBI’s new Corporate Governance Code which was enforced effective October 1, 2014, all publicly traded companies in India need to furnish details related with pay packages offered to their CEOs, Chairman, and Founders. And the data collected so far throws some interesting insights.
105 year old ITC, having annual revenues of $7.81 billion (2013-14) have beaten all public companies when it comes to salary gap between their Chairman and an average employee. YC Deveshwar, who is the current chairman of ITC receives a salary which is 439 times that of an average employee’s salary in ITC.
Even India’s richest man Mukesh Ambani doesn’t enjoy this privilege, as his salary is mere 205 times that of an average employee. Noteworthy is the fact that Mukesh Ambani hasn’t asked for any salary increment in the last 7 years: Since 2008, his salary is capped at Rs 15 crore, every year meanwhile the average salary of his employees has increased by 3.71% to reach Rs 7.29 lakh during the same period.
HDFC’s Chairman Deepak Parekh is the only person who seems to believe JP Morgan and Peter Drucker’s rule of 20 times; as his salary is 19 times that of an average HDFC bank employee’s salary. However, MD of HDFC Bank, Aditya Puri takes home a salary which is 119 times that of an average employee.
Here is a comparison of salary received by top-notch executives, compared with the mean salary of their employees:
- Axis Bank’s Managing Director and CEO Shikha Sharma: 74 times
- HDFC Ltd. Managing Director Renu Sud Karnad: 77 times
- HDFC Ltd, Vice Chairman and CEO Keki Mistry: 83 times
- Wipro Chairman Azim Premji: 89 times
- HUL’s CEO Sanjiv Mehta: 93 times
- ICICI Bank’s CEO Chanda Kochhar: 97 times
- Infosys CEO Vishal Sikka: 116 times
- Wipro’S CEO TK Kurien: 170 times
- Vedanta Limited’s Chairman Navin Agarwal: 293 times
Another interesting thing to note is that, although some CEOs and Chairman have such gross remuneration, but their net pay is much lower owing to tax deductions and other cuts. For example, although ITC Chairman’s gross remuneration was Rs 15 crore in 2014-15, but his net pay was only Rs 7.30 crore. In case of Azim Premji, his allowed his pay to be declined by 53% last year, and at the same time his employee’s median pay increased by 9.5%.
This is not the complete list, as the data is only available for those companies which have showcased this data as of now.