Companies spend 3 times on CEOs than other senior execs, says study

Study says hikes will be around 9.4% for senior executives next year

A report by global management consultancy Hay Group said that CEOs are paid 3 times more than all other senior executives. This is because companies are placing a much higher value on the role of the CEO for achieving overall business results as compared to the top management team.

As per the Hay Group's Top Executives Compensation Report 2012-13, CEOs are paid 4 times more than senior executives in industries such as Basic Resources and Retail, while it falls below the average in industries such as Transport and Logistics, and Construction and Materials.

For 2013, the report said that revealing that the compensation of CEOs and their top executives is set to increase by 9% & 9.4% respectively in the coming year. This exhibits a dip from the double-digit growth witnessed in previous years.

Sridhar Ganesan, Rewards Practice Leader, Hay Group India explains, “Hay Group research has found that markets, strategy, culture, and ambitions are the four real drivers of modern-day executive compensation. This is important to keep in mind as data analytics on executive compensation have to be interpreted beyond just the stated numbers”.
 
Statistical analysis between the Hay Level (proxy for job contour in terms of scope, scale, size, complexity, etc.) and Total Cost to Company (CTC) found a co-relation of 0.26 – indicating that other factors, besides just the organization’s contour affect CEO compensation.
 
The Top Executive Compensation Report 2012-2013 features insights from about 158 organizations across the sectors of Auto, Chemicals, Basic Resources, Oil and Gas, FMCG, Retail, Construction and Materials, Telecommunication, Utilities, Industrial Goods, and Transportation.