NEW DELHI: Pay hike for senior executives in India to be over 9% this year and the average CEO compensation is Rs 8.4 crore currently after increasing 21% in the last four years, leading global professional services firm Aon said on Monday. Releasing findings from its latest “executive rewards survey in India” that is its twelfth annual study which analysed data across 519 companies from more than 25 industries, the firm said within “pay at risk” — the sum of variable pay and long-term incentives (LTI) for total compensation — the LTI component has increased to 40% of the total compensation, up from 26% in 2015-16.
The study found that amongst BSE’s top 30 companies, LTI is provided at 176% of fixed pay for CEOs and at 103% for other c-level executives, including the COO, CFO, sales leader and chief human resources officer. The average LTI amount for CEOs for these companies is Rs 10 crore.
Nitin Sethi, chief executive officer, Human Capital Solutions, India and South Asia at Aon, said: “Senior executives’ salary increases continue to focus on pay at risk, indicating the emphasis on rewarding executives for the value they bring to the organisation. In a rapidly evolving, volatile business environment, organisations seek to adopt executive pay programs that drive the right behaviours, are cost effective and contribute to long term business results. Organisations can therefore benefit from a data-driven approach to make better decisions regarding complex executive compensation issues while navigating business volatility.”
AON says one in three companies are focusing on improving diversity levels for Board and senior managerial positions. Boards are embedding environmental, social and governance (ESG) factors, diversity and succession metrics in the long-term and short-term goals for CEOs and executive leaders.
Pritish Gandhi, director and practice leader of the executive compensation and governance practice in India at Aon, said: “With rising shareholder activism, pay governance has become a key focus area for India Inc. As a result, organisations are updating their Malus clauses that is additional checks before vesting of long-term executive incentives, particularly in cases of material financial restatement. At the same time, claw back clauses which allow organisations to retrieve past pay-outs under exigent circumstances of fraud and misconduct are also being applied for a duration of three to five years, as organisations design their 2023 executive compensation programs.”
The study found that amongst BSE’s top 30 companies, LTI is provided at 176% of fixed pay for CEOs and at 103% for other c-level executives, including the COO, CFO, sales leader and chief human resources officer. The average LTI amount for CEOs for these companies is Rs 10 crore.
Nitin Sethi, chief executive officer, Human Capital Solutions, India and South Asia at Aon, said: “Senior executives’ salary increases continue to focus on pay at risk, indicating the emphasis on rewarding executives for the value they bring to the organisation. In a rapidly evolving, volatile business environment, organisations seek to adopt executive pay programs that drive the right behaviours, are cost effective and contribute to long term business results. Organisations can therefore benefit from a data-driven approach to make better decisions regarding complex executive compensation issues while navigating business volatility.”
AON says one in three companies are focusing on improving diversity levels for Board and senior managerial positions. Boards are embedding environmental, social and governance (ESG) factors, diversity and succession metrics in the long-term and short-term goals for CEOs and executive leaders.
Pritish Gandhi, director and practice leader of the executive compensation and governance practice in India at Aon, said: “With rising shareholder activism, pay governance has become a key focus area for India Inc. As a result, organisations are updating their Malus clauses that is additional checks before vesting of long-term executive incentives, particularly in cases of material financial restatement. At the same time, claw back clauses which allow organisations to retrieve past pay-outs under exigent circumstances of fraud and misconduct are also being applied for a duration of three to five years, as organisations design their 2023 executive compensation programs.”