- Tuesday, April 30, 2024
As per the Deloitte India Executive Performance and Rewards Survey 2024, while average CEO compensation stands at Rs 13.8 crore, CEOs who were also promoters or members of the promoter family are paid Rs 16.7 crore on average.
By: Twinkle Roy
INDIAN B2B private sector organisations have upped the ante for CEOs, revealing the data of a recent Deloitte survey on executive performance and rewards.
The report has revealed that the average CEO compensation in India has reached Rs 13.8 crore (£1.3 million), seeing a 40 per cent rise compared to the scenario before the Covid-19 pandemic, with more than half of the total remuneration being linked to short-term and long-term incentives.
As per the Deloitte India Executive Performance and Rewards Survey 2024, while average CEO compensation stands at Rs 13.8 crore, CEOs who were also promoters or members of the promoter family are paid Rs 16.7 crore (£1.58 million) on average.
Read: UK unions unhappy over pay talks with Sunak government: ‘Bitterly disappointing’
Anandorup Ghose, partner, CHRO Programme Leader, Deloitte India, said, “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 at 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.”
According to Deloitte, while CEO compensation has increased, more than 50 per cent of target compensation is ‘pay-at-risk’. For professional CEOs, pay-at-risk at 57 per cent is much higher than for promoter CEOs at 47 per cent.
Professional CEOs have 25 per cent of their target compensation delivered through long-term incentives, which for most companies, is paid through share-linked incentives.
Read: UK: Tech firms hiring foreign talent will have to pay more
Deloitte reported that CEO compensation in India has experienced high-single-digit annualized growth rates.
“The wide gap between median and average CEO compensation (Rs 9.3 crore versus Rs 13.8 crore) indicates the wide range of compensation numbers and some outliers on the higher end,” it added.
When evaluating CEO and CXO performance, the majority of companies employ a comprehensive scorecard encompassing a blend of financial and non-financial metrics and objectives. Nonetheless, incentives for CEOs and CXOs predominantly lean towards financial company-level goals within these scorecards.
Deloitte illuminated the long-term incentive patterns too. It showed the proportion of companies employing share-based incentives saw a continual rise (75 per cent in 2024 compared to 63 per cent in 2020), while the prevalence of stock options or ESOPs continued to decline (49 per cent of companies in 2024 versus 68 per cent in 2020).
“Large Indian companies with more mature and globally aligned compensation practices are pivoting towards Performance Shares and use of multiple incentive plans for different employee cohorts. Conversations in the boardroom have also shifted from the need for share-based payment to the return from these incentive structures to stakeholders,” Ghose added.
The fifth edition of the Deloitte India Executive Performance and Rewards Survey was launched in September 2023. More than 400 organisations participated in this B2B India-specific survey, which did not include any public sector companies.
(With PTI inputs)
