Salaries of senior executives in India are projected to increase by 8.9% in the year 2022 as compared to the actual rise of 7.9% in 2021, professional services firm Aon finds in its 11th executive rewards survey 2021- 22. This is the highest in the last half a decade.
The study analysed data across 475 companies from over 20 industries. The median CEO compensation for 2022 was estimated at ₹7.05 crore. The increase in salaries of top executives is seen rising to a five-year high in 2022.
The actual salary hike for senior executives in 2016 was 9.3%, and subsequently, it kept falling amid the economic slowdown to 8.6% (2017), 8.5% (2018), 8.1% (2019), 5.1% (2020), and 7.9% (2021).
The salary increase for other employees is also projected to increase to the five-high high of 9.9% in 2022, up from an actual increase of 9.3% in 2021 and 6.1% in 2020.
Industry-wise, senior executives across financial institutions are projected to get an 8.2% salary hike as compared to an actual increase of 7.4% in 2021. In manufacturing, the projected hike is seen at 9.3% as compared to 7.4% in 2021. In tech and ITeS, the expected hike is 9.2% versus 8.4% in 2021. In consumer-facing firms, senior executives can expect an average hike of 8.1% vs 7.7% offered in 2021.
The compensation analysis shows top executives across sales, marketing or customer services firms taking an average of ₹1.94 crore remuneration in 2022. Operations (manufacturing) follows next with ₹1.93 crore, followed by finance (₹1.83 crore), strategy (₹1.72 crore), HR and admin (₹1.65 cr), technology and ITeS (₹1.5 crore), operations (₹1.44 crore), supply chain and manufacturing (₹1.35 cr) and legal (₹1.27 cr).
The pay mix for CEO and key CXO roles continues to move towards higher pay at risk, the survey finds. Around 44% of companies are using restricted stock units as a vehicle for awarding long term incentives, while 22% are using performance units as a vehicle to award long-term incentives, reveals the survey.
As companies mature in their rewards philosophy, there is an attempt to balance ownership, performance and retention through stock options, performance shares and restricted shares, respectively, it says.
Pay at risk — a sum of variable pay and long-term incentives to total compensation — for CEOs stands near 60%, while C-level executives including the chief operating officer, chief financial officer, sales head and chief human resources officer follow closely behind at 50%.
Nitin Sethi, partner and CEO, India for human capital solutions at Aon, said in the wake of Covid, talent is in short supply and the cost of attracting, retaining and engaging leadership talent that grows business is rising rapidly. "Not only is the average executive compensation increase 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,” adds Sethi.
The annual long-term incentive for CEOs on average is 125% of the fixed pay, it finds. Most companies use a mix of performance and retention-based grants, with at least 50% of this amount linked to performance measures such as shareholder return, profit, revenue and cashflows.
