Pay of top executives may rise 8.9% in ’22, highest in 5 years
NEW DELHI: Salaries of senior executives in India are likely to increase by 8.9% in 2022, highest in five years, amid a recovery in business sentiments post pandemic, according to leading global professional services firm Aon plc.
The Aon’s 11th annual Executive Rewards Survey in India, which analysed data across 475 companies from more than 20 industries, further noted that the median chief executive officer compensation has reached ₹7.05 crore.
With fundamentals of the economy remaining strong and business sentiments positive, there are strong tailwinds that resulted in top executives’ salary increase to be projected at 8.9% from 7.9% in 2021, according to the survey.
Moreover, the pay mix for CEO and key CXO roles continue to move towards higher pay at risk, as per the survey.
CXOs refer to common c-suite executives including CEOs, chief financial officers (CFO), chief operating officers (COO), and chief information officers (CIO).
Pay at Risk, which is the sum of variable pay and long-term incentives (LTI) to total compensation, for CEOs stands near 60%, while C-level executives including COO, CFO, sales head and chief human resources officer follow close behind at 50%, according to the survey.
“Over the last few decades, a large percentage of India Inc has turned to outside talent, instead of building from within. However, in the wake of the covid-19 pandemic, talent is in short supply and the cost of attracting, retaining, and engaging leadership talent that grows business is rising rapidly,” said Nitin Sethi, partner and CEO, India, human capital solutions, at Aon.
Sethi also contended that “not only is the average executive compensation increase the highest in five years, but variable pay and equity grants have also increased as companies cannot risk losing key talent at senior levels as this has implications on delivering business performance”.
The survey said that the annual LTI for CEOs on an average is 125% of fixed pay. Most companies use a mix of performance and retention-based grants, with at least 50% of the grant amount linked to performance measures such as shareholder return, profit, revenue, and cash flows.