CEO pay hits ₹9 Cr; AI skills fetch 40% premium as salary hikes average 9%

Skills are becoming the new currency of pay, with premiums rising 30-40% for AI, ML, cybersecurity, and cloud capabilities.

India Inc is set to roll out an average 9.1% salary increment in 2026, but the real story lies beneath that headline number. According to the EY Future of Pay 2026 report, pay growth is becoming sharply skill-driven, performance-differentiated, and data-backed — meaning what you earn next year may depend more on what you can do than how long you’ve worked.

 

Where Salary Growth Is Strongest

 

If you work in a Global Capability Centre (GCC), you’re in the sweet spot. GCCs are projected to lead pay growth with 10.4% salary increases in 2026, followed by:

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• Financial Services: 10%
• E-commerce: 9.9%
• Lifesciences & Pharma: 9.7%

 

Attrition has also moderated. Overall attrition fell to 16.4% in 2025 (from 17.5% in 2024), suggesting a stabilising job market. GCCs stand out again, reporting relatively lower attrition at 14.1%, compared to 24% in Financial Services and 20.5% in Hi-Tech & IT. 

 Financial Services recorded the highest attrition at 24%, particularly across sales, relationship management, and digital roles. Professional Services stood at 21.3%, followed by Hi-Tech and IT at 20.5%. In contrast, GCCs reported relatively lower attrition at 14.1%, reinforcing their growing stability.

 

  “We are at a turning point in how organizations think about investing in their people. The future of pay in India is no longer defined by the size of the annual increment alone. It is increasingly about precision – deciding which skills to invest in, which outcomes to reward, and how to balance competitiveness with sustainability. Rewards strategies are becoming more deliberate, with sharper differentiation and better use of data to guide decisions. At the same time, employees are looking beyond the size of the increment; they want clarity, fairness, and consistency in how pay decisions are made," said Abhishek Sen, Partner and Leader, Total Rewards, HR Technology and Learning, People Consulting, EY India.

 

Skills Are the New Currency of Pay

 

The biggest shift? Compensation is moving from role-based to skills-based models.

 

AI, GenAI, ML, cybersecurity and cloud skills now command 30–40% pay premiums.

 

Nearly 45–50% of organizations are shifting toward skill-based pay frameworks.

 

Variable pay has increased to 16.1% of fixed pay, up from 14.8% last year.

 

Performance differentiation is sharpening too:

 

Top performers are earning 120–150% of target payouts.

Average performers receive 60–80% of target payouts.

 

The gap between high and average performers widened, with top talent earning 120–150% of target payouts while average performers received 60–80%, sharpening pay-for-performance outcomes.

 

Quarterly variable pay cycles also gained traction, with nearly 28% of organizations adopting them, especially in sales-driven roles. Around 35% of large organizations now link 5–15% of leadership variable pay to ESG metrics. Clawback provisions tightened further, with approximately 65% of BFSI organizations implementing two- to three-year post-payout clawback periods.

 

Strategic use of LTIPs for talent retention

 

Organizations are strategically reshaping their long-term incentive plans (LTIPs) to better balance talent retention, performance alignment, and long-term wealth creation. Around 30% of companies now run two or more LTI plans in parallel. ESOPs continue to be the most prevalent instrument, with adoption rising to approximately 78% in 2025 from about 71% in 2024. With nearly 75% of NSE 200 companies offering LTIs, these plans have become a standard component of CEO compensation, particularly within listed entities. At the same time, GCCs and technology-led organizations are broadening LTI eligibility beyond leadership teams to include individual contributors with critical and scarce skills.

 

 

Leadership Pay & Long-Term Incentives

 

The report also highlights how executive compensation is evolving:

 

Median CEO compensation in Nifty 200 companies has risen to ₹7–9 crore, up 12–15% year-on-year. 

 

 On average, 25–30% of total CEO pay is fixed, while short-term incentives contribute another 25–30%, and long-term incentives account for 45–50%, emphasizing performance-linked compensation.  COOs and CFOs emerged as the highest-paid roles after CEOs. 40–45% of CEO transitions over the last 5 years have been internal promotions, signalling a preference for homegrown leadership talent.

 

Around 78% of companies now offer ESOPs, up from 71% last year.

 

Importantly, GCCs and tech firms are extending long-term incentives beyond just leadership — rewarding critical individual contributors as well.

 

If you're an employee or job seeker in 2026:

 

• Upskilling is non-negotiable — AI and digital skills command premium pay.
• Performance visibility matters more than ever — pay-for-performance gaps are widening.
• Sector choice influences earnings trajectory — GCCs and digital-first industries are leading.
• Variable pay is growing — fixed salary increases may look steady, but bonuses will differentiate outcomes.

 

The era of broad-based increments is fading. The future of pay in India is about precision — investing in scarce skills, rewarding measurable impact, and using analytics to differentiate performance.