Salaries of senior executives in India are likely to increase by 8.9 per cent 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 CEO compensation has reached Rs 7.05 crore.
With fundamentals of the economy remaining strong and business sentiments positive, there were strong tailwinds which resulted in top executives' salary increase to be projected at 8.9 per cent from 7.9 per cent in 2021, it said.
Moreover, the pay mix for chief executive officer (CEO) and key CXO roles continue to move towards higher pay at risk, as per the survey.
CXO roles refer to common c-suite executives including CEO, chief financial officer (CFO), chief operating officer (COO), and chief information officer (CIO).
Pay at Risk - which is the sum of variable pay and long-term incentives (LTI) to total compensation - for CEOs stands near 60 per cent, while C-level executives including COO, CFO, sales head and chief human resources officer follow closely behind at 50 per cent, as per 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 for Human Capital Solutions at Aon.
Sethi further said that "not only is the average executive compensation increase highest in five years, but variable pay and equity grants have also risen 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 per cent of fixed pay. Most companies use a mix of performance and retention-based grants, with at least 50 per cent of the grant amount linked to performance measures such as shareholder return, profit, revenue and cash flows.