Down by 1.4 per cent from 2020, leading global professional services firm Aon Plc has projected a six per cent salary increase for senior executives in 2021.
According to the latest Executive Rewards Survey in India by Aon, excluding long-term incentives (LTI), the median chief executive officer (CEO) compensation in India ranges from Rs 15 crore for owner-promoter CEOs to Rs 3.63 crore at Indian private companies.
The study analysed data across 504 companies from more than 20 industries. The sum of variable pay and LTI as a percentage of total compensation is 52 per cent of CEOs in India compared to 87 per cent for CEOs in the US.
Commenting on the findings, partner and CEO of Aon’s performance and rewards business in India Nitin Sethi said, "The Covid-19 pandemic had less of an impact than the 2008-09 global financial crisis, when projected salary increases for senior executives dropped by 6.2 per cent." As against during the global financial crisis when executive salary increase fell from 12.4 per cent in 2008-09 to 6.2 per cent in 2009-10, the impact has been lesser during the Covid pandemic with the salary increase down from 8.1 per cent in 2019-20 to 5.2 per cent in 2020-21.
Variable pay for top executives has been most impacted by the Covid-19 pandemic, with payouts for executives who had a “Meets Expectations” performance rating projected to drop from 95 per cent in 2019-2020 to 85 per cent in 2020-2021.
Executive pay practices in India are catching-up with those of US and European companies, said Ray Everett, CEO of Aon’s Human Capital & Rewards Solutions across Asia Pacific, Middle East & Africa.
"Over half of Total Compensation for CEOs in India today is linked with business performance. Performance Shares and Restricted Stock Options are becoming more prevalent, as more companies are moving away from basic Stock Options," said Everett.
Apart from CEOs, the highest-paid executives in 2020-2021 are the chief operating officer and chief financial officer, followed by the sales head and chief human resources officer.
The head of legal and head of IT are among the lowest-paid executives. Strategy and finance continue to be the top remunerative functions for executives. The survey data also shows that financial institutions and the Fast Moving Consumer Goods (FMCG) sectors continue to lead in India on executive pay.