Indian IT CEO pay skyrockets, widening gap with employee salaries
BENGALURU, INDIA — The gap between CEO and employee compensation in India’s IT industry has continued to widen over the past five years, with only IBM showing a narrowing of this disparity.
According to a Times of India report, major companies such as Accenture, Infosys, Wipro, and HCLTech reported significant increases in CEO pay compared to the median employee salary, largely driven by the rising value of stock grants.
Record-breaking pay disparity at top IT firms
Infosys founder NR Narayana Murthy once suggested that a fair CEO salary should be 25 to 40 times that of the lowest-level employee. However, current CEO Salil Parekh’s compensation is nearly 700 times the median employee’s pay, a figure that has surged since 2019.
Similarly, Wipro’s former CEO Thierry Delaporte earned $20 million, making his compensation 1,702 times higher than the median employee salary of approximately $12,000 in the 2023-24 fiscal year
HCLTech has also seen a dramatic increase in pay disparity, with CEO C Vijayakumar’s compensation ratio rising from 253:1 to 707:1 in just one year. This made Vijayakumar the highest-paid chief executive among Indian IT services companies.
Meanwhile, Accenture’s CEO Julie Sweet earned $31.5 million in 2023, 633 times the median employee salary of $49,842. Notably, this median salary was lower than in 2019, highlighting the growing gap.
A report by Equilar noted that stock awards accounted for about 70% of total CEO compensation in 2023, with the median value of these awards increasing by 10.7% to $9.4 million. This trend significantly contributes to the widening pay gap.
Regulatory and shareholder perspectives
In India, the Ministry of Corporate Affairs mandated the disclosure of pay ratios in 2014, but the lack of a standardized computation methodology allows companies to determine these figures at their discretion.
Shriram Subramanian, founder of InGovern Research Services, explained that as IT firms have become global entities, senior-level compensation is benchmarked to international standards, outpacing company growth rates.
Meanwhile, entry-level salaries have stagnated due to an increase in entry-level positions, exacerbating the pay ratio.
Limited shareholder activism
Despite the growing disparity, shareholder activism on this issue remains limited in India.
Amit Batish of Equilar noted that while executive compensation often prompts some level of activism, significant action typically occurs only when there is a perceived misalignment between pay and company performance.
In contrast, labor unions and organizations in the United States use pay ratio data for bargaining, a practice not yet prevalent in India.
Global context and trends
Globally, CEO compensation continues to rise, with the median CEO pay in S&P 500 companies reaching $16.3 million in 2023, a 12.6% increase from the previous year.
This widening gap is particularly evident in sectors where employees earn lower wages, such as retail, where CEOs can earn hundreds of times more than their median employees.
