Salaries of top execs will see double-digit rise in FY15: Hay Group

Top executives in India are likely to see their salaries rise in double-digit percentages this year.

The pay of managing directors (MDs) and chief executives (CEOs) are expected to grow by 10.2 per cent and those in senior management by 10.5 per cent, says global management consultancy Hay Group, in a report on the subject for this country.

The compensation of MDs and CEOs grew 10 per cent in 2013-14 and of senior management by 10.4 per cent.

A positive economic outlook and a stable government, believe organisations, will help their businesses do better.

Benefits and perquisites, says the survey, are increasingly becoming smaller components in the overall compensation structure, as organisations move to a cash-based remuneration structure.

“From an overall perspective, India’s top management compensation mix continues to be more driven by fixed pay in comparison to other Asian, European and American economies,” said Hay Group India's managing consultant, Hemant Upadhyay.

“Incentive plans (short- and long-term) have become key elements of top executive compensation. These plans are aimed at ensuring retention, driving business performance and/or recognising role model behaviours,” he added.

The report added the difference between MD/CEO salaries and those of other top executive roles had reduced over the years. A significant part of the compensation (30-40 per cent) of the latter is variable, with a link to business performance.

According to Hay, employee stock options continue to be the most prevalent long-term incentive, with 57 per cent of companies opting for this, followed by performance shares (36 per cent) and restricted shares (21 per cent).

CEOs TO GET RICHER

• Median salary for the MD/CEOs expected to increase to 10.2% in 2015, up from 10% last year
   
• CEO’s top team also expecting a double-digit pay rise of 10.5%, versus 10.4% last year
   
• Difference between MD/CEO salaries and other top executives’ salaries reducing over the years
   
• Benefits increasingly becoming a smaller component, as organisations move towards cash-based compensation
   
• Performance-linked incentive plans steadily gaining importance as key elements of top executive compensation