Salary Of Top 4 IT Firms In India Is Upto 1000% More Than Average Employee Salary!
Over the last five years CEOs of Indian IT firms have seen a meteoric rise in their compensation.
This is outside the norm as an analysis by Forbes India shows.
What’s behind the rise?
The reason for this jump has been two-fold.
First is the liberal grant of stock options often in the form of restricted stock units (RSUs).
These usually have a vesting price of Rs1-5 and are certain to vest after a fixed time period.
Salil Parekh of Infosys received a part of his compensation in the form of RSUs.
Only Rajesh Gopinathan of TCS did not receive stock options since the company doesn’t have an ESOP plan.
He was instead compensated with commission that is given out based on performance parameters being met.
IT vs Non-IT companies
CEO compensation in case of four large Indian IT services forms–Infosys, TCS, Wipro and Tech Mahindra (with stock options included) is between 200-1,000 times the average employee compensation that ranged from Rs 5 lakh to Rs 8 lakh in 2021-22.
Compared to their counterparts at other large companies–Hindustan Unilever, Maruti, Bharti Airtel and InterGlobe Aviation–the contrast is even more stark.
At Rs 41 crore, the highest compensation was received by Gopal Vittal of Bharti Airtel.
This is the highest among non-tech companies.
Wipro pays out the most, Maruti Suzuki more humble
This is a clear display of the ratio between CEO compensation and average employee compensation which is only rarely over 200 times at any of these non-IT companies.
Meanwhile, Thierry Delaporte of Wipro received Rs 79 crore in 2022.
The most egalitarian from the lot surveyed by Forbes India is the country’s largest carmaker–Maruti Suzuki.
It doesn’t have any ESOP programme.
On top of that the average compensation between the CEO and the average employee ranged between 31 to 46 times.
“High premium” on Indian IT CEOs
Kamal Karanth, co-founder, Xpheno says that the high-margin business nature of technology companies creates high value enterprises.
These are largely incomparable with similar-sized enterprises in other sectors.
As a result these CEOs generate a lot more profit per unit of capital employed.
The global peerage these CEOs relate to and connect puts a high premium on them.
The astronomical pay Indian CEOs get is to match or compete with global CXO benchmarks.
Bottom of the pyramid suffers from more supply than demand
Karanth says, “Tech CEOs drive the largest human pyramid of coordinated effort and excellence, and this is ranked higher than managing tools and machining dependent sectors”.
As for the bottom of the pyramid comprising average employees, talent is hit by low demand-supply gaps due to the high availability of talent.
As long as the market for their products as well as their employment opportunity set remains global, tech CEOs are likely to demand and get compensated well.