CEO Pay in IT Industry Soars, Exceeding 1,000 Times the Median Salary
UV INDIA NEWS: The gap between CEO compensation and median employee salaries continues to widen in the IT industry. Data over the past five years from major IT companies such as Accenture, Infosys, Wipro, and HCL reveals significant disparities, with only IBM showing a narrowing of this gap. Most large IT firms have seen CEO pay escalate far beyond that of their employees, reflecting a broader trend of increasing executive compensation, often driven by stock grants.
The most notable instance is Wipro, where former CEO Thierry Delaporte’s compensation was 1,702 times the median salary of ₹8.9 lakh in the 2023-24 financial year. Similarly, Accenture's CEO Julie Sweet earned $31.5 million, 683 times the median salary of an Accenture employee, which stood at $49,842. In contrast, the median CEO-employee pay ratio among the S&P 500 companies in the US was 186:1 in 2022.
In India, regulatory requirements mandate companies to disclose their pay ratios as per the Ministry of Corporate Affairs (MCA) guidelines. However, these guidelines do not prescribe a specific calculation method, allowing companies to report these figures as they see fit.
Several factors contribute to this disparity. As IT services firms have become global entities, CEO compensation is often benchmarked against international standards. Ram Subramanian, founder and MD of In Govern Research Services, noted that with IT companies growing into global players, there is a significant increase in CEO pay as talent at senior levels is benchmarked globally. He emphasised that while CEO compensation has increased significantly, pay for entry-level employees has not seen comparable growth.
Additionally, the increasing role of stock awards, which constituted about 70% of CEO compensation in 2023, further amplifies the disparity. The median value of these awards rose by 10.7% from 2022 to 2023, underscoring the growing influence of performance metrics on executive pay.
The widening gap has drawn criticism from various quarters, including former industry leaders like Infosys co-founder NR Narayana Murthy, who has argued for more equitable compensation structures that reflect employees' contributions across all organisation levels. However, despite such calls for reform, the disparity continues to grow, raising concerns about the broader implications for employee morale and corporate governance.
