This illustrates what worries many: India’s unbalanced economic emergence. But how big is the gap? As reported by “Plain Facts”, the median salary of executive directors of the country’s 500 largest listed companies was ₹5.7 crore in 2023-24, up 8.6% from the previous year and 50% from what it was in 2018-19.

Poonawalla Fincorp Managing Director Abhay Bhutada tops the profit list with ₹241 crore compensation in the last financial year.

Pawan Munjal, Chairman and Executive Director of Hero MotoCorp, is next with ₹109 crore, while Crompton Greaves executive vice-chairman Shantanu Khosla, in third place, was paid ₹99 crore, Tech Mahindra CEO and Managing Director CP Gurnani received ₹92 crore and Sun TV Executive Chairman Kalanithi Maran ranked fifth got ₹88 million.

The top five represent only 1% of the sample, but double-digit packages are also lower in the order.

Certainly, it is up to the shareholders of a company to determine the remuneration of its key personnel. If the person at the helm brings a mix of skills, talent and strategic direction that energizes the business and enables it to achieve ambitious goals, then the value generated could well justify significant rewards.

Much of the compensation of senior executives is variable pay, with financial reward schemes designed to directly align their interests with those of the company, an added incentive to give their best in their work. In addition, market forces must be taken into account.

Given the complexity of running a large business, the demand for those who appear to have what it takes often exceeds the supply. As CEO headhunters argue, the critical nature of the role means that hiring risk should be kept low, so track record matters, narrowing the consideration set.

If overseas hires are part of it, offers can skyrocket. But what about the company’s other employees? A look at what CEOs make compared to the median employee salary is surprising. Take the top of this order.

At 2,899, this ratio is the highest in 2023-24 among the Nifty 500 for Signature Global, whose chairman and executive director Pradeep Kumar Aggarwal has earned as many times the salary level that divides his staff into top and bottom halves.

With 1,383 times, Tech Mahindra’s Gurnani ranks second, with the triple-digit ratios of Uno Minda’s Nirmal K. Minda, JSW Steel’s Sajjan Jindal and HCL Technologies’ C. Vijayakumar making up the next three ranks in this field .

The disparities could be bad for business. They could harm the morale of employees who feel poorly rewarded and thus harm their productivity. This effect can be worse if the link between pay and performance at the top is unclear, as is sometimes the case.

Furthermore, amid signs of wage stagnation at lower levels, especially in the context of a profit-driven rather than wage-driven recovery from the pandemic, huge wage ratios look bad. Even in a market context, the Rawlsian conditions determining what can justify such inequality should apply.

First, while some positions may have exceptional pay, the opportunity to hold that position should be open to everyone. Second, the role that such a leader plays must be in the interest of all. Without these two criteria, it would be unfair.