In an ideal world, remunerations of leadership teams and employees should show positive correlation. If the CEO’s pay grows, so should the employee’s.

At ₹1,825.8 crore, total remuneration (which includes bonus and stock options wherever applicable) of the top 50 executives at Fortune India 500 companies grew by ₹243 crore or 15.35% in FY19. What about growth in employees’ pay? Just 7.26% in FY19, compared to 10.22% growth recorded in FY18. One may argue there is positive correlation, but what about the difference? There are six executives who earned more than1,000 times the median remunerations of their respective employees.

Vinod K. Dasari topped the list of the 50 highest paid executives (based on FY19 data). As CEO and managing director of Ashok Leyland (No. 49on the Fortune India 500 list), Dasari, took home ₹131.21 crore—597.58%more than last year’s ₹18.81 crore. The primary reason for the jump is his exercising stock options which brought in ₹110.24 crore. Dasari got 1,545.63 times more than ₹8,48,909—the median employee remuneration at Ashok Leyland for FY19. Dasari, who quit Ashok Leyland on March 31, 2019, is now CEO of Eicher Motors Ltd, the maker of Royal Enfield bikes.

HEG, last year’s Fortune India 500 debutant, jumped 181 spots to No. 206 thanks to revenues rising 151% and profits rising 175%. The three-digit growth also reflected in the remuneration of Ravi Jhunjhunwala, HEG’s chairman, managing director and CEO. He earned ₹121.27 crore—a 180% growth from last year’s ₹43.33 crore—which is 4,045 times higher than the median employee pay at HEG.

Sun TV Network (No. 314) paid its executive chairman Kalanithi Maran and executive director Kavery Kalanithi ₹87.5 crore each in FY19. Their pay was the same as last year’s, but here’s the fun fact: K. Vijay Kumar, who resigned as MD and CEO with effect from March 31, 2019, and continues on the company’s board as an executive director with effect from April 1, 2019, took home just ₹1.29 crore ( ₹96 lakh as salary and ₹33 lakh in ex-gratia/bonus). At Sun TV Network, which has not disclosed median employee remuneration, total remuneration of directors is 1.15 times total employee cost.

There are 10 executives on the list whose companies have not disclosed the ratio of directors’ remuneration to that of the median employee remuneration. Some of the firms that have, have done it a bit differently. Take Divi’s Laboratories (No. 257). Chairman and MD Murali K. Divi, and executive directors N.V. Ramana and Kiran S. Diviearned ₹58.81 crore, ₹29.9 crore, and ₹20.23 crore, respectively. According to the company’s annual report, the ratios of director’s remuneration to median employee remuneration for the trio are as follows—1: 0.0006838, 1: 0.0013540, and1:0.0019875. Do they seem benign? These workout to be 1,463, 743, and 503 times with a bit of ‘reverse financial engineering’. The approximate median employee pay here is ₹4.02 lakh.

The same method was adopted by Alembic Pharmaceuticals (No.313). Chairman and CEO Chirayu Amin’s ₹25.5 crore pay is 15.91% higher than FY18’s ₹22crore. Compared to the median remuneration of employees, it is 1:0.00141, i.e. around 709 times. Business leaders could argue their pay growth was much less compared to last year’s 50%, but the fact remains inequality in terms of pay between them and those who follow them is stark. At ₹474.09 crore, the total median employee pay at Fortune India 500 companies is just a third of what the 50 top earners at these companies make. Not so ideal, is it?

This was originally published in the December 15-March 14 special issue of the magazine.

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