Analysis of Executive Compensation with Reference to SBI and ICICI

Abstract

Executive compensation plays a significant role in corporate governance, strategic decision-making, and organizational performance in the banking sector. This study analyses and compares the executive compensation practices of the State Bank of India (SBI) and ICICI Bank, representing the public and private banking sectors in India. The study is based on secondary data collected from the annual reports, corporate governance disclosures, and financial statements of both banks for the period from FY2020–21 to FY2024–25. The analysis covers year-wise total executive remuneration, the composition of compensation, individual executive remuneration, executive compensation as a percentage of net profit, and trends in executive compensation over the study period. Comparative and trend analyses are employed to examine differences in compensation practices between the two banks. The findings indicate that executive compensation has increased over the years in both banks; however, the structure and level of remuneration differ due to variations in ownership, regulatory requirements, governance practices, and performance-based reward systems. SBI follows a regulated compensation framework, whereas ICICI Bank adopts a more market-driven and performance-linked remuneration policy. The study concludes that transparent and performance-oriented executive compensation practices strengthen corporate governance, enhance managerial accountability, and support sustainable organizational growth. The findings provide useful insights for policymakers, regulators, researchers, and banking professionals in understanding executive remuneration trends in the Indian banking sector.

Introduction

This study examines executive compensation practices in State Bank of India (SBI) and ICICI Bank between FY2020–21 and FY2024–25, focusing on how compensation structures differ between India's public and private banking sectors. Executive compensation is an important element of corporate governance because it helps attract, retain, and motivate capable leaders while aligning executives' interests with those of shareholders through performance-based rewards and long-term value creation.

SBI and ICICI Bank represent two distinct compensation models. SBI, as a public sector bank, follows a government-regulated remuneration framework emphasizing accountability and standardization, whereas ICICI Bank, a private sector bank, adopts a market-oriented approach with fixed salaries, variable incentives, retirement benefits, and stock-based compensation linked to performance. The study compares executive remuneration, compensation composition, individual executive pay, compensation as a percentage of net profit, and overall compensation trends over five years using secondary data from annual reports, corporate governance reports, remuneration disclosures, financial statements, and RBI publications.

Review of Literature

The literature highlights several important themes:

• Executive compensation should be evaluated based on its ability to motivate executives and improve organizational performance.
• Equity-based and performance-linked compensation aligns executive and shareholder interests.
• The relationship between executive pay and firm performance is often positive but varies across organizations and industries.
• Corporate governance, board independence, and shareholder activism significantly influence compensation decisions.
• Recent research increasingly links executive compensation to Environmental, Social, and Governance (ESG) performance and sustainability objectives.
• Greater transparency in remuneration disclosures strengthens investor confidence and corporate governance.

Need for the Study

The study addresses the growing importance of executive remuneration in the banking sector amid increasing regulatory oversight and stakeholder expectations. Comparing SBI and ICICI Bank helps explain how ownership structure and governance frameworks influence compensation practices, managerial accountability, and organizational performance.

Objectives

The study aims to:

• Compare executive compensation practices between SBI and ICICI Bank.
• Analyze compensation trends and growth from 2020 to 2025.
• Examine the relationship between executive compensation and net profit performance.

Research Methodology

The research adopts a descriptive and analytical design based entirely on secondary data collected from annual reports, corporate governance reports, financial statements, RBI publications, academic journals, and official financial databases. The analysis covers the period 2020–2025 using descriptive statistics, trend analysis, Compound Annual Growth Rate (CAGR), Pearson correlation, and comparative analysis.

Data Analysis

The year-wise executive compensation data show that remuneration increased in both banks during the study period.

• SBI's executive compensation increased steadily from ?14.94 million in FY2020–21 to ?27.33 million in FY2024–25.
• ICICI Bank's executive compensation increased from ?16.86 million to ?36.51 million, despite a slight decline in FY2023–24.

Throughout the five-year period, ICICI Bank consistently paid higher executive compensation than SBI, reflecting the greater emphasis placed by private sector banks on market-based, performance-linked remuneration.

Conclusion

The study concludes that executive compensation increased in both SBI and ICICI Bank during FY2020–21 to FY2024–25, reflecting the growing importance of rewarding leadership in the banking sector. ICICI Bank consistently provided higher and more performance-oriented executive remuneration than SBI, while SBI followed a more regulated compensation structure. Although compensation practices differed between the two banks, executive remuneration represented only a very small proportion of net profit in both institutions. Overall, transparent and performance-linked executive compensation strengthens corporate governance, enhances managerial accountability, and supports the sustainable growth of banking organizations.

References

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Copyright

Copyright © 2026 Miss. Rajeshwari S. Tondihal, Dr (Smt.) Chandramma M.. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.