Indian CEOs Are Paid 137-Times More Than An Average Employees; Here’s The Global Average Of Pay Disparity

The pay difference between CEOs and regular employees is increasing day by day. A new report by CRISIL has revealed that chief executive officers (CEOs) get paid 130 times more than a regular employee.

However, this is still much lower than  the global average, which is 250-350x.

Read on to find out what the report says!

CEOs Getting Paid 137 Times More; What’s The Reason?

The companies that were surveyed for the report ranked the ratio of CEO pay-to-median pay (the wage disparity measure) as the fourth most difficult environmental, social and governance (ESG) target to meet.  

As per the report, the CEOs of private companies get paid 137x more. Here, tyre, auto original equipment manufacturer (OEM) and textiles sectors showed the greatest difference, with their CEOs being paid 375x, 296x, and 258x more, respectively. Whereas, FMCG and metals sectors have recorded the lowest numbers – at 134x and 133x, respectively.

PSU CEOs Getting Paid 4.8 Times Median Pay

On the other hand, the scenario in PSUs is quite different, with their CEOs getting paid only  4.8 times more than the median pay.

Miren Lodha, director of CRISIL Research said, “CEO pay in PSUs has been very low (historically) especially when compared to the private sector. Hence, the pay parity is better in PSUs. Ideally, CEO pay should be linked with growth of the company, adequately incentivising CEOs.”

The difference has been attributed by Lodha to familial ties, “In the top three sectors that had high pay disparity, the CEO/MD are promoters or related to the promoter.” Also, some of the companies in these sectors have appointed  their CEO/MD recently, which is why the pay is so high. 

Pay Disparity Highest In IT Sector

Ignoring the promoter and promoter-related CEOS, the IT sector is where there is highest pay disparity, as the CEO gets 141x the median pay. For this, Lodha has credited “stock options that are exercised during the year, newly appointed CEOs getting a one-time bonus, and high variable pay/commission/bonus.”

One example of this could be Salil Parekh, CEO of Infosys whose compensation has increased 88 percent to Rs 79.75 crore a year, making him the highest paid IT CEO in India. His salary is 872x the company’s median pay including stock-based compensation, and 229x  if excluded.

Lodha also said that wage parity is poorer in sectors that were more dependent on contractual or temporary workers.