In the year of covid, the corner suite got the biggest pay hikes

Some industry experts attribute the inequity partly to the extra responsibility the top bosses shouldered in steering their companies through the unprecedented crisis. (iStock)
Some industry experts attribute the inequity partly to the extra responsibility the top bosses shouldered in steering their companies through the unprecedented crisis. (iStock)


  • Not all top bosses could justify their FY21 hikes by a growth in company profits. While analysts attribute the pay raises to the extra responsibility CEOs had at a time of crisis, the same in a year of widespread layoffs also brings to the fore rising income inequalities

The pandemic turned 2020 into a year of economic turmoil, but even amidst widespread job losses, members of the C-suite were able to corner handsome pay hikes, data suggests. Nifty 100 companies paid chief executives and managing directors an 11% raise in their median remuneration in 2020-21, even while other employees got almost flat pay raises, shows data from

To be sure, the coveted club of Nifty 100 directors earning over 1 crore in a year shrank as some took pay cuts in solidarity with staffers. But the decline, the first in years, was marginal: 293 directors earned 1 crore in 2020-21, down from 297, Mint calculations show.

Some industry experts attribute the inequity partly to the extra responsibility the top bosses shouldered in steering their companies through the unprecedented crisis. But as recent face-offs at Eicher Motors and Balaji Telefilms show, shareholders are not too pleased, turning down several resolutions on board remuneration in recent months.

“Barring a few industries that were particularly badly hit, many companies have done well in terms of pivoting to digital, relooking at their operations and supply chains, and taking out costs," said Sonal Agrawal, managing partner at Accord India, a C-suite executive search firm. “Some who navigated the volatility successfully are being rewarded for it."

The relentless rally in stock markets since last year may also have contributed to fatter pay packets, experts said, citing the growing prevalence of performance shares, employee stock ownership plans (ESOPs) and restricted stock options.

Divergent fortunes

As in the rest of the world, the earnings gap between the top executives and the average employee in India’s listed firms has only been getting wider over the years. But a year of layoffs may not be the best for that gap to grow further, particularly for companies that could not stave off financial distress, some analysts feel.

In 2020-21, Nifty 100 CEOs earned a median 7 crore, around 100 times the median pay of their employees. Not all could justify their pay raise with a revenue increase for their businesses. For some, the pay ratio was over 1,000 times.

The analysis covered 85 companies for which the data was available.

Pranav Haldea, managing director of PRIME Database, said that while it was fair for top business leaders to be compensated for navigating through last year’s distress, it should not be “at the cost of those rewards not flowing to the rest of the organization as well".

Voicing concerns

No wonder, signs of dissent are creeping in. Shareholders are increasingly peeved at high compensation packages for the top executives. Sample this: in 2018-19, at least 66 NSE-listed firms saw resolutions related to remuneration for the board rejected by more than 20% institutional investors. In 2020-21, this number rose to 97, the analysis shows.

Shriram Subramanian, founder and managing director of InGovern, a proxy advisory firm, expects compensation to become a major bone of contention between companies and shareholders for many years to come. Companies, he said, should have more detailed disclosures on compensation, and should engage more with shareholders to understand their perspective on the same.

While shareholders in some cases are putting their foot down, there is still some distance to cover. In some cases, companies consider pay hikes after factoring in the pain and cost of replacing high-performing senior personnel, Agrawal said. Several boards went ahead with such hikes last year as long as they could afford it.

Global practices

Companies could build greater trust among shareholders if they establish a closer link between CEOs’ earnings and the company performance. But pay practices in India are not yet on par with those in the West. Variable pay and long-term incentives—components of pay that are linked to business performance—comprise 87% for US CEOs, but the same is just over half in India, showed a 2020-21 survey by Aon, a professional services firm.

Such linkage between salaries and business metrics are gaining traction. As large Indian firms get global, they could relook their executive hiring practices, eventually moving compensation models closer to global practices, said Pothen Jacob, head of executive compensation and governance at Aon.

Boards and remuneration committees have been becoming sensitive to regulators and shareholder activism while taking a medium-to-long-term view on executive level compensation. However, as the pandemic year inequity shows, they may need to do more to address the disequilibrium with the rest of the organization.

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