Special Report - Executive Remuneration: Time to rein in the rewards
Special Report - Executive Remuneration: Time to rein in the rewards
8 May 2013 Mumbai: At a time when the global markets plagued by a prolonged slowdown are stumbling towards recovery, public scrutiny and criticism of high executive remuneration is getting sharper. In India, while there have been some isolated cases of discontent regarding executive pay this umbrage is nowhere close to the ‘say-on-pay’ movement that is rocking US and Europe.

In this special report "Executive Remuneration: Time to rein in the rewards" IiAS highlights some of the key compensation trends in India's largest listed companies. The report states that while the average CEO remuneration for the BSE 500 companies has gone up in the last four years by 25%, it is largely in line with increase in profitability - primarily because of the two-part remuneration structure prevalent in most companies which comprises a fixed pay along with a variable component. However some trends and fault lines are clearly visible. Some of the observations are:
  • The highest salary paying companies are not necessarily the most profitable or the largest in terms of market cap. These companies are outliers and tend to skew the overall remuneration levels of the BSE100 and BSE500 companies.
  • There is a substantial gap between salaries of owner CEOs and professional executives.
  • For family owned businesses, where multiple family members are on the board, their combined remuneration tends to be on the higher side and in one case constituted almost 70% of the total staff costs.
  • The pay disparity between the public sector and private sector has grown over the last few years. For the BSE 100 companies, while the public sector executives were paid an average remuneration of Rs.5.1 mn in FY11, their private sector peers were paid Rs.68.9 mn.
  • Variation between average employee salary and CEO salary is high (average of 285x and median of 85x).
Remuneration
To read the full report click here.

Institutional Investor Advisory Services India Limited (IiAS) is a voting advisory firm, dedicated to providing participants in the Indian market with independent opinion, research and data on corporate governance issues as well as voting recommendations on shareholder resolutions for over 300 companies.

In addition to voting advisory, IiAS assists investors with proxy voting, provides AGM/EGM 'end-of-day' minutes and acts as a record keeping agent by maintaining the history of votes cast in shareholder meetings. IIAS provides bespoke research, valuation advisory services and assists institutions in their engagement with company managements and their boards.

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