In 2022, the salaries of CXO and top executives will increase by 5.9%, the highest in 5 years: Aon survey
According to awards firm Aon’s annual executive award, CEOs, CXOs and senior executives of India Inc. are expected to grow at a five-year high of 8.9 percent in 2022 due to strong fundamentals of the economy and positive business sentiment. The survey was released on Wednesday. This increase is one percentage point less than the 9.9 percent growth project for the same year’s overall employees.
According to the survey, which analyzed data from 475 companies from more than 20 industries, the salary increase for senior executives has increased from 7.9 percent in 2021. The agency further expects pay rises in the next 24 months as companies’ pay budgets continue to rise since the onset of the epidemic. And the battle for executive talent is in full swing, it noted.
Median CEO’s compensation has reached Rs 7.05 crore, the study said.
By sector, manufacturing is set to grow at a maximum of 9.3 percent, followed by technology and ITes at 9.2 percent, life sciences at 8.4 percent, financial institutions at 8.2 percent and the consumer segment at 8.1 percent.
Work-based, sales, marketing and customer service to the tune of Rs 1.94 crore and manufacturing activities to the tune of Rs 1.93 crore, these two sectors pay the highest to their top executives and senior management. Legal minimum is Rs 1.27 crore, while HR and admin are in the middle with an average salary of Rs 1.65 crore.
Nitin Sethi, Partner and CEO, India for Human Capital Solutions, said: However, in the wake of the COVID-19 epidemic, there is a shortage of talent, and the cost of attracting, retaining, and engaging leadership talents that grow businesses is growing rapidly. Not only is average executive compensation growth the highest in five years, but variable pay and equity grants have also increased because companies cannot risk losing key talent at the senior level because it affects business performance delivery. ”
The composition of the CEO’s salary is 50 percent, which is fixed salary (regardless of their performance), 21 percent variable salary (determined by the performance of the year under consideration) and 29 percent long-term incentive or LTI (determined by performance for more than one year). CEO-1 or executives reporting directly to CEOs, such as CFOs or COOs, the mix is 61, 20 and 19 percent, respectively. CEO-2 or those who are reporting to executives who report to CEOs, the mix varies to 69, 17 and 13 percent, respectively.
Pritish Gandhi, India director and executive leader of Executive Compensation and Governance Practice at Aon, said the move towards higher risk-based pay, which is common in the United States, is a continuing trend in India.
Also, there is pressure on established companies that they can increase the cover of LTIs beyond the top executives, Sethi said. “India will begin to see the use of LTIs on a broader basis than the United States. That won’t change overnight, but progressive companies are carefully evaluating if they can increase coverage for a strong proposal. ”
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