Dilip Shanghvi, second-wealthiest Indian, is the poorest pharma CEO

MUMBAI: Dilip Shanghvi, founder of Sun Pharmaceutical Industries, might be the second-wealthiest Indian and the richest pharma baron, but when he dons the hat of a CEO, he stands among the lowest-paid bosses. Shanghvi’s salary for 2013-14 was Rs 2.73 crore, according to data sifted by ET from filings of leading listed drug companies. This included salary, bonus and perquisites such as house allowance, insurance and provident fund.

Compare that with Lupin patriarch DB Gupta, who drew a remuneration of Rs 37 crore in 2014-15. Gupta’s long-serving vice chairman Kamal Sharma had a pay of Rs 16.6 crore. Gupta took a 1% salary hike from the previous year, whereas Sharma’s pay was raised by 23%, Lupin’s annual report shows.

A significant portion of Gupta’s pay is an entitlement of 1% commission from Lupin’s profit. Sun Pharma’s annual report for 2014-15 is expected in December. While the promoters and founders of leading drug companies are paid the best, experts said salaries for professional CEOs are also rising.

Headhunters said Indian drug makers are moulding themselves after multinational peers in developed markets such as the US and not shying away from hiring the best senior-level talent. The scope of talent acquisition spills beyond the pharma industry. “Pharma, which a decade ago, was considered a less lucrative sector, is not so anymore.

It is no longer difficult to get talent from the FMCG segment to move to pharma if compensation is a key driver,” said Sachin Rajan, MD of Russell Reynolds Associates, a top executive headhunting firm.

Indian companies with scale and global aspirations tend to pay much higher than the domestic affiliates of multinational companies, offering as much as a 40% hike to hire talent at the chief executive level. Much of this differential is in the form of stock, providing wealth creation opportunities.

If executives with experience in global markets have to be hired from multinational companies, the rate can jump by between 30-40% of their annual package, said an industry executive.

Experts said the rate at which Indian companies seek to grow and the directions they chart far outstrip the pace at which they are able to groom talent internally.

The issue is compounded by their more nascent talent retention and career development systems. If there is one thing that differentiates Indian and multinational drug companies in the country, it is the pay disparity between the top executives and the mid- and junior-level employees. Director’s salaries, evaluated against the Median Employee Remuneration (MER), are highly skewed for Indian companies compared with their multinational rivals.