CEO pay has now surpassed pre-pandemic levels and this is the first survey where the average total CEO pay has crossed the Rs 10 crore mark, according to Deloitte India’s 2022 CEO Survey. executive compensation. He added that the median CEO total compensation is Rs 7.4 crore.
“CXO compensation has also seen a rebound from 2021 levels. COO (Chief Operating Officer), CFO (Chief Financial Officer) and Head of Business Unit continue to be among the highest paid CXO roles. In most roles, company size has a greater influence on pay levels compared to the industry in which the company operates,” the survey report states.
The study covered the findings of over 470 companies in India on the amount and structure of executive compensation. The study uses the consistent definition of compensation and approach to value long-term incentives like stock options. This makes the quantum between the different participants comparable.
Rising compensation levels come with a strong link to performance 51% of CEO compensation is “at risk” or variable. Earnings from this component could drop to zero in the event of weak stock price and/or fundamental company performance.
“Forty-one percent of CXO compensation is ‘at risk’, 25% of CEO compensation was in the form of long-term incentives (eg ESOPs). For CXOs, long-term incentives were 20% of compensation. For companies with a long-term incentive plan, 91% had a vesting period of three years or more,” according to the survey.
The average CXO compensation is over Rs 3 crore, with nearly 40% of total compensation at risk. The compensation ratios between CEO and CXO vary between 2.4 for the COO and 4.9 for the general counsel. Besides COOs, CFOs and CEOs are the highest paid CXOs, according to the survey report.
Despite a growing share of compensation in the form of long-term incentives, executive talent continues to be highly mobile within and between sectors: two out of five analyzed companies have seen at least one change of CEO since 2016. out of three new CEOs during this period were hired from outside. Of three CEOs hired externally, two held a CXO position in the previous company.
For the CEO, 84% of STI depends on business performance. The corresponding number is around 50% at the CXO level. Nearly 80% of companies prefer a goal-based approach to determining IST. “We find that 60% of companies use long-term incentives. ESOPs continue to be the most widely used type of LTI instrument,” the report adds.
The survey report said: “The past few years have been relatively volatile and therefore unpredictable due to multiple ‘one-off’ events both in India and globally. As the negative economic impact of COVID 19 has lessened over time, the focus has largely shifted from cost optimization alone to talent retention. As a result, CEO compensation has now exceeded pre-pandemic levels (among other consequences). »
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