Reflecting the challenges the Indian economy has faced due to global headwinds, FY23 saw an increase of 12.5 percent in median executive compensation compared to 24 percent in FY22 at India’s top 30 listed companies by market capitalisation for the last three years., shows data put together exclusively for Moneycontrol by consulting firm CIEL HR.
However, further estimations indicate that the average employee salary experienced grew just 7-8 percent in FY23 and 8-9 percent during FY22. CXOs include the president, CEO, managing director, CFO, COO, CHRO, etc.
Median compensation refers to the middle value of all compensation packages within a specific group or organisation. It is the point at which half of the employees' compensation packages falls below that value and half fall above it. In other words, it is the middle point when all compensation figures are arranged in ascending/descending order.
Median compensation is often used as a measure of central tendency in salary data because it is less sensitive to extremely high or low outliers compared to the mean (average) compensation. It provides a more representative picture of what a typical employee earns within a particular company or industry.
CIEL studied the CXO compensation of the top 30 listed companies by market capitalisation for the last three years. This list includes companies like Reliance Industries, Tata Consultancy Services (TCS), Infosys, HCL Tech, Wipro, Axis Bank, ICICI Bank, Kotak Mahindra Bank, Life Insurance Corporation of India, State Bank of India (SBI), JSW Steel, Asian Paints, Sun Pharmaceutical Industries and Avenue Supermarts, among others, and comprises companies across industry sectors.
“FY22 saw an increase over 2021 in terms of CXO compensation, reflecting the recovery our economy showed from the early shocks of Covid-19 in FY21. But the slump in executive compensation FY23 showed the challenges our economy has faced due to the global headwinds,” Aditya Narayan Mishra, MD and CEO of CIEL HR, told Moneycontrol.
He said the tapering off in median CEO compensation growth by 12 percent is largely attributable to the variable component of executive salaries being closely tied to company performance. The prevailing economic slowdown and a reduced number of projects have, in turn, led to an overall decrease in executive compensation hikes.
Simultaneously, Mishra said that recognising the need for fairness in these challenging times, leaders have prioritised increasing employee compensation to boost morale, ensure retention and underscore their commitment to equity and employee satisfaction, thereby balancing the economic challenges faced by the organisation.
NTPC tops growth, JSW lags
In the study, two public sector undertakings bucked the trend. NTPC recorded the highest growth in terms of median salaries for CXOs at 34 percent in FY23 and 24 percent in FY22, followed by Coal India at 18 percent in FY23, reversing a decrease in salaries by 15 percent in FY22.
Among private companies, IT major TCS registered the highest growth of 7 percent in FY23 followed by Reliance Industries at 6 percent.
JSW Steel and Larsen & Toubro (L&T) were at the other end of the spectrum, with median pay actually falling by 49 percent and 12 percent, respectively.
However, JSW still offers the highest median salaries to its CXOs, more than Rs 24.70 crore per annum. In FY22, the median salaries of CXOs at JSW grew by 77 percent and at L&T by 96 percent.
“Historically, executives in these organisations (JSW and L&T) have enjoyed substantial compensation compared to their counterparts, positioning these companies at the forefront of offering competitive salaries. However, the recent economic slowdown has impacted their compensation, particularly in terms of bonuses and variable pay, reflecting the broader economic challenges faced by these industries,” Mishra said.
Despite the slower growth in FY23, the median CXO salary for the top five by pay offered stood at over Rs 24.37 crore.
In absolute terms NTPC, Power Grid Corporation of India, Oil and Natural Gas Corporation, Coal India and SBI—all from the public sector—featured among the companies offering the lowest median salaries to their CXOs, at Rs 80 lakh per annum.
However, it's important to note that there are exceptions, and compensation in some PSUs can still be relatively competitive. Additionally, the compensation landscape in India can change over time, and some PSUs have made efforts to align their compensation practices more closely with those of the private sector to attract and retain top talent.
Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
