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Are Indian CEOs Overpaid?
By siliconindia
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Monday, 14 November 2011, 16:48 IST
IBM's Sam Palmisano earns salary and bonuses of $10.8 million for steering a company of the size of $102 billion. IVRCL's E Sudhir Reddy runs a $1.3 billion infrastructure company earning more or less the same salary. And he's the promoter, who rakes it in through dividends as well.
Jignesh Shah, Chairman, Financial Technologies, drew the equivalent of $5.6 million in purchasing power terms from a company with $69 million in turnover in 2010. His salary accounts for a major share of his company's turnover, over 3 percent in actual terms, and over 8 percent in PPP terms.
There is one reason why the gap is so narrow between Indian CEOs and US ones is that many of the Top 20 firms are headed by promoters, who obviously give themselves huge salaries.
Some 15 of our Top 20 Indian CEOs are promoters as well. If we add their promoter incomes, they could well be paying themselves more than their US counterparts.
Mukesh Ambani's dividend income on his 44 percent promoter holdings in Reliance Industries adds up to over 
1,050 crore and this is tax-free income where the company pays the dividend tax to government. While Ambani rakes in about $9 million, the other two promoter colleagues Nikhil Meswani and Hital Meswani rake in over $6 million each in salaries in purchasing power terms.
If salaries at the CEO level are catching up with the West, the lower echelons may not be far behind. Mercer Consulting, in a study released in May, says that executive pay in Asia will match up, if not exceed, those of its counterparts in Europe and the U.S. by 2013. The report also said that pay at the senior levels had risen at a rate that was disproportionate to performance delivered.
Aon Hewitt, an advisory firm, reported that the gap between Asia and the West was closing even at current levels, especially if one were to look at purchasing power parity rather than direct exchange rate conversion.
1,050 crore and this is tax-free income where the company pays the dividend tax to government. While Ambani rakes in about $9 million, the other two promoter colleagues Nikhil Meswani and Hital Meswani rake in over $6 million each in salaries in purchasing power terms.
If salaries at the CEO level are catching up with the West, the lower echelons may not be far behind. Mercer Consulting, in a study released in May, says that executive pay in Asia will match up, if not exceed, those of its counterparts in Europe and the U.S. by 2013. The report also said that pay at the senior levels had risen at a rate that was disproportionate to performance delivered.
Aon Hewitt, an advisory firm, reported that the gap between Asia and the West was closing even at current levels, especially if one were to look at purchasing power parity rather than direct exchange rate conversion.
