Salary data reveals that even Covid failed to change India’s deep corporate disparity

A comparison of data of compensation paid to key management personnel (KMP) and the average compensation of 42 private companies in Nifty50 companies for 2019-20 has revealed a large disparity in corporate salaries.

A Sebi rule requires publicly traded companies to disclose their top management’s compensation relative to other employees since 2015, notes a press release from economists Reetika Khera and Meghna Yadav. These disclosures are mandatory under Section 197 (12) of the Companies Act 2013, read with Rule 5 (1) of the Companies (Appointment and Remuneration of Management Personnel) Rules of 2014.

The numbers for 2019-20 showed that at a time when company after company made pay cuts and laid off employees during the Covid-ravaged months, there appeared to be little financial hardship for the upper echelons of Indian companies.

The highest salary ratio is seen at JSW Steel at 1: 1052, where Sajjan Jindal is the highest paid executive with an annual salary of Rs 70 million. “We thought this (wage ratio) was a typo and it should be 105.2,” commented the economists. “But it seems not.”

Only one other executive is paid more than Jindal: Pawan Munjal at Hero Motocorp with an annual salary of Rs 84.6 million. However, the pay rate at Hero is drastically lower at 1: 752. Maruti Suzuki has the lowest pay rate at 1:39, and the highest paid executive Kenichi Ayukawa receives an annual salary of Rs 4.67 crore. The economists added that there has been little change in salary ratios over time: “If we compare the percentage increase in the compensation of the highest paid executive with the percentage increase in average compensation, we find that of 38 companies of which had data, the increase in average remuneration was lower for 18 companies and higher for 19 companies ”.

There is also a disparity in diversity among the top KMP companies. There is only one woman on this list: Vibha Padalkar at HDFC Life Insurance. “There doesn’t seem to be any Dalits or STs, and there is (at least) one Muslim,” Khera and Yadav said.

As mentioned above, companies are now required to disclose this data annually, which has generated a lot of interest in media circles over the years. As of now, Reliance is the only private Nifty50 company that does not report the rate of pay and has been circumventing compliance with Rule 5 (1) since 2016-17, according to economists.

Reliance’s annual report says: “Such information is available for inspection every business day, during business hours, at the Company’s Registered Office. Any member interested in obtaining such information can write to the Secretary of the Company and it will be provided upon request ”.