News »Browse Articles » Top honchos in small firms see higher salary growth
am paid for the excitment...Whether, it is good or bad times, top executives of Indian firms have always got a bumper salary deal. 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.
The analysis done by Economic Times, 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, during the financial year (FY) 2009, on an aggregate basis, salaries of top honchos grew by about 35 percent, while other employees in these organizations only saw an overall growth of about 11 percent in their packages.
The case was similar in the mid-cap segment where the decision makers saw their salaries decline by one percent, while other employees saw a more sizeable fall of about five percent. Interestingly, the trend was opposite in the large-cap segment. In this segment, the top management salary 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 capitalization) from the small-cap, mid-cap and large-cap indices where salaries of top management and other employees have been available for comparison. Kris Lakshmikanth, CEO of Headhunters says, "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."
However, experts say that the strategy also varied from one company to another, depending on the sector and the structure of the package. 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.
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. However, in the large-cap segment, 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 percent, remuneration of other employees went up by 25 percent during FY09.
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