If you are keen to know how much a CEO earns, well their average compensation stands at Rs 13.8 crore and it is 40% more than how much they earned before Covid. This is according to the Deloitte India Executive Performance and Rewards Survey. Not just that, every second CEO had a target compensation of more than Rs 10 crore in 2024 Vs every third CEO in 2020. Meanwhile, the median compensation for CEOs stood at Rs 9.3 crore.
CEOs who were also promoters or members of the promoter family are paid Rs 16.7 crore on average. Additionally, about three of every four CEOs in India now earn more than Rs 5 crore.
As per the survey, the gap between median and average CEO compensation, that is Rs 9.3 crore versus Rs 13.8 crore, indicates the wide range of compensation numbers and some outliers on the higher end.
Over the past four years, the ratio of promoter to professional CEO compensation also increased significantly. “Promoter CEO compensation outpacing professional CEO compensation is primarily driven by two factors. Professional CEOs change more often than promoter CEOs due to the longer tenure of promoter CEOs as an aggregate. But it is also important to note that the range of promoter CEO compensation is very wide, and that affects the higher averages,” Anandorup Ghose, Partner, CHRO Programme Leader, Deloitte India, said.
An analysis of CEO changes in BSE 200 companies (excluding PSUs) revealed that 45% of companies witnessed a CEO change over the past five years. Six of every 10 new CEOs are homegrown, meaning internally appointed while the remaining four CEOs were external hires.
While CEO compensation has increased, more than 50% of target compensation is pay-at-risk. For professional CEOs, pay-at-risk at 57% is much higher than for promoter CEOs at 47%. Professional CEOs have 25% of their target compensation delivered through long-term incentives, which for most companies, is paid through share-linked incentives.
While assessing CEO and CXO performance, most companies use a holistic scorecard that includes a mix of financial and non-financial metrics and targets. With respect to long-term incentives, the report mentions two broad trends:
1. The percentage of companies using share-based incentives continues to increase as it is 75% in 2024 against 63% in 2020.
2. The prevalence of stock options, or ESOPs, continues to decrease as it is 49% of companies in 2024 when compared with 68% percent of companies in 2020.
Further, COOs and CFOs continue to command the highest compensation premiums in India amongst the other CXOs. For these two roles, 44% of target compensation is at-risk, with almost half of it being driven through long-term incentives.