The salary of senior corporate executives is projected to increase by 8.9 per cent this year in comparison to 7.9 per cent growth last year, a recent survey conducted by Aon Plc shows. This is the highest jump in salary of C-level executives in five years, according to Aon’s 2022 Executive Rewards Survey in India. The projected jump can be attributed to the positive business sentiment in the country, and as companies look inward to attract and retain internal talent, Aon added.
The median compensation of chief executive officers reached Rs 7.05 crores this year, the survey findings show. The survey was conducted across 475 organisations in the country. Sectorally, manufacturing is expected to see the biggest jump of 9.2 per cent in their senior executives pay. This will be followed by Technology and IT-enabled services, life sciences, financial institutions and consumer sector which will see 9.2 per cent, 8.4 per cent, 8.2 per cent and 8.1 per cent rise respectively.
“Over the last few decades, a large percentage of India Inc has turned to outside talent instead of building from within. However, in the wake of the COVID-19 pandemic, talent is in short supply and the cost of attracting, retaining and engaging leadership talent that grows business is rising rapidly,” Nitin Sethi, partner and CEO, India for Human Capital Solutions at Aon said. “Not only is the average executive compensation increase the highest in five years, but variable pay and equity grants have also risen as companies cannot risk losing key talent at senior levels as this has implications on delivering business performance,” Sethi added.
Pay at Risk – which is the sum of Variable Pay and Long-Term Incentives (LTI) to Total Compensation – for CEOs stands near 60 per cent, while Pay at Risk for c-level executives, including the chief operating officer, chief financial officer, sales head and chief human resources officer, stood at 50 per cent.
Most companies use a mix of performance and retention-based grants, with at least 50 percent of the grant amount linked to performance measures such as shareholder return, profit, revenue and cash flows, Aon said, adding that the annual long-term incentive for CEOs on average is 125 percent of fixed pay.