The average Chief Executive Officer (CEO) compensation in India has crossed the Rs 2 crore mark on a cost to company (CTC) basis, according to a report by global management consultancy Hay Group.
The Top Executives’ Compensation report by the group showed that compensation was pegged at more than Rs 7 crore at larger, more complex organisations.
For the next level of top executives (excluding the CEO), the average compensation was above Rs 1 crore on a CTC basis.
Sridhar Ganesan, Rewards Practice Leader, Hay Group, commented, “Compensation is expected to further go up, owing to the increasing cross-sector employability of CEOs – the new breed of ‘Lateral CEOs’. Instances such as global cement major recruiting an Indian investment banker as the CEO of its India operations and head of Indian manufacturing company joining an IT company to lead manufacturing vertical, point to cross-sector movements. This broader landscape of opportunities, coupled with the scarcity of ‘holistic’ CEOs, will drive executive compensation northwards.”
Another marked trend the report highlighted was the growing focus on performance, leading to a more pronounced variable pay component in overall compensation. The study found variable pay as a percentage of fixed CTC to be in the range of 15-30 per cent. The performance focus also led to a growing trend of long-term incentives, for both CEO/MD levels as well as other executives, with stock options being the most prevalent vehicle.
The report further said benefits, excluding long-term incentives (LTI), have been on the decline, as organisations were looking at cash as an important element of compensation.
The ‘Top Executive Compensation Report 2011-2012’ featured insights from about 87 organisations across sectors, analysing compensation practices of top executives — CEOs, their direct reports, and heads of businesses as well as functions.
