Top brass in small firms see higher salary growth
Despite the slowdown , salaries of the senior management at small-cap and mid cap cos still managed to grow at a pace which far outdid the growth in the pay packets of the other employees.
By Anand Rawani & Lisa Mary Thomson, ET Bureau |
NEW DELHI: Good times or bad, the top honchos of India Inc have always got a bumper salary deal, or so it seems. It may have been the year when India saw its mass scale layoffs and salary cuts, but the gap between the salaries of the top management and that of the other employees only got wider.
A SundayET analysis reveals that despite the slowdown , salaries of the senior management at small-cap and mid cap companies still managed to grow at a pace which far outdid the growth in the pay packets of the other employees.
In the small-cap segment, for instance, during FY09, on an aggregate basis, salaries of top honchos grew by about 35% while other employees in these organizations only saw an overall growth of about 11% in their packages.
The case was similar in the mid-cap segment where the decision makers saw their salaries decline by 1%, while other employees saw a more sizeable fall of about 5%. Interestingly , the trend was the opposite in the large-cap segment. In the large cap segment the top management slaray grew at a lesser rate than the other employees.
The analysis, which was done on the basis of data from the CMIE Database, included the top ten companies (based on market capitalisation) from the small-cap , mid-cap and large-cap indices where salaries of top management and other employees have been available for comparison.
The sample of small-cap companies includes names of Vedanta���s group���s Sterlite Technologies, Tata group���s IT solutions company CMC, Jindal South West Holdings, financial services organization, HSBC Investdirect, Prakash Industries, Eicher Motors, Infotech Enterprises, Mahindra Lifespace Developers, Rain Commodities and Bombay Dyeing & Manufacturing. However, the analysis focused on the aggregate results, rather than the results of individual companies.
However, experts say that the strategy also varied from one company to another, depending on the sector and the structure of the package. In companies where there was a level of profit sharing with the top management, the management was retained and kept as a crucial part of the process of keeping profits up and costs down. In sectors such as manufacturing, companies were able to get lower level employees as per their requirements easily even during the slowdown.
In the case of HSBC Investdirect, which was formed after HSBC acquired IL&FS Investmart at the end of September 2008, a company spokesperson explained that the payments were a one-off instance, in respect of ex-gratia payments made to erstwhile staff. CMC declined to comment saying it was a sensitive issue.
Meanwhile, the need to ring-fence key resources was also deemed to be the reason for the hikes in management salaries in mid-cap companies, the sample for which included companies like Bharat Forge, Castrol India , Exide Industries, GVK Power & Infrastructure, Godrej Consumer Products, JSW Steel, Mphasis, Piramal Healthcare, Shree Renuka Sugars and Shriram Transport Finance Co, are part of the mid cap segment.
lisa.thomson@timesgroup .com
A SundayET analysis reveals that despite the slowdown , salaries of the senior management at small-cap and mid cap companies still managed to grow at a pace which far outdid the growth in the pay packets of the other employees.
In the small-cap segment, for instance, during FY09, on an aggregate basis, salaries of top honchos grew by about 35% while other employees in these organizations only saw an overall growth of about 11% in their packages.
The case was similar in the mid-cap segment where the decision makers saw their salaries decline by 1%, while other employees saw a more sizeable fall of about 5%. Interestingly , the trend was the opposite in the large-cap segment. In the large cap segment the top management slaray grew at a lesser rate than the other employees.
The analysis, which was done on the basis of data from the CMIE Database, included the top ten companies (based on market capitalisation) from the small-cap , mid-cap and large-cap indices where salaries of top management and other employees have been available for comparison.
The sample of small-cap companies includes names of Vedanta���s group���s Sterlite Technologies, Tata group���s IT solutions company CMC, Jindal South West Holdings, financial services organization, HSBC Investdirect, Prakash Industries, Eicher Motors, Infotech Enterprises, Mahindra Lifespace Developers, Rain Commodities and Bombay Dyeing & Manufacturing. However, the analysis focused on the aggregate results, rather than the results of individual companies.
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Speaking of the reasons for this trend, Kris Lakshmikanth, CEO of Headhunters says that the handsome rewards handed out by some of these companies were largely part of a strategy aimed at retaining the top management. ���In fact, the support of the top management was required in order to manage the rest of the organization at a lower budget,��� he says.However, experts say that the strategy also varied from one company to another, depending on the sector and the structure of the package. In companies where there was a level of profit sharing with the top management, the management was retained and kept as a crucial part of the process of keeping profits up and costs down. In sectors such as manufacturing, companies were able to get lower level employees as per their requirements easily even during the slowdown.
In the case of HSBC Investdirect, which was formed after HSBC acquired IL&FS Investmart at the end of September 2008, a company spokesperson explained that the payments were a one-off instance, in respect of ex-gratia payments made to erstwhile staff. CMC declined to comment saying it was a sensitive issue.
Meanwhile, the need to ring-fence key resources was also deemed to be the reason for the hikes in management salaries in mid-cap companies, the sample for which included companies like Bharat Forge, Castrol India , Exide Industries, GVK Power & Infrastructure, Godrej Consumer Products, JSW Steel, Mphasis, Piramal Healthcare, Shree Renuka Sugars and Shriram Transport Finance Co, are part of the mid cap segment.
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However, in the large-cap segment, which involved some of the titans of India Inc like cement major ACC, telecom supremo Bharti Airtel, Aditya Birla group���s flagship company Grasim Industries, Hindustan Unilever, HDFC Bank, Infosys Technologies, Maruti Suzuki India, State Bank Of India, Tata Consultancy Services and Wipro. amongst others, other employees in the organizations seemed to have benefited more than the senior level employees . While the top honchos saw their salaries growing by 20%, remuneration of other employees went up by 25% during FY09.lisa.thomson@timesgroup .com
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