According to an analysis by governance firm Institutional investors Advisory Services, in Indian companies, the salaries of professional managers are much lower than those of their counterparts related to the companies’ owners.
“There is a substantial gap between salaries of owner CEOs (chief executive officers) and professional executives.
"While our data does not include Esops (employee stock option plans) to professional CEOs, anecdotally, we believe this disparity would still hold, even if Esops were to be considered,” IIAS said in a report titled ‘Executive Remuneration: Time to rein in the rewards’.
The report added for family-owned businesses in which multiple family members were on the board, their combined remuneration tended to be on the higher side; in one case, it accounted for about 70 per cent of the total staff costs.
But managerial personnel can take heart from the fact that they are better placed than the average employee.
In India, data for Sensex companies show in 2011-12, executives were paid a median remuneration 85 times that of the average employee.
Though the average employee remuneration grew since 2009-10, remuneration of managing directors grew faster.
Another glaring disparity was the one between private companies and public sector undertakings.
On an average, executive directors in the private sector (BSE100) took home an annual remuneration of Rs 6.89 crore in 2010-11. In contrast, the annual remuneration for public sector executives averaged just Rs 51 lakh.
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