Senior Executives Likely To Get 8.9 Per Cent Pay Hike In 2022; Highest In 5 years, Says Survey

Most firms use a mix of performance and retention-based grants, with about 50 per cent of the grant amount linked to performance measures such as shareholder return, profit, revenue, and cashflows

For CEOs, pay at risk, which is the sum of Variable Pay and Long-Term Incentives to total compensation stands near 60 per cent, the survey showed. Image: Getty

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New Delhi: Salaries of senior executives in India have risen by 8.9 per cent in 2022 from 7.9 per cent in 2021.

Pay at Risk, which is the sum of Variable Pay (VP) and Long-Term Incentives (LTI) to Total Compensation, for CEOs stands near 60 per cent. For the C-level executives, including the chief operating officer, chief financial officer, sales head, and chief human resources officer following closely behind at 50 per cent.

According to a recent survey, the largest and the most comprehensive of its kind in India, conducted by Aon Plc analysed data across 475 firms across 20 industries.

The press release mentioned that most firms use a mix of performance and retention-based grants, with about 50 per cent of the grant amount linked to performance measures such as shareholder return, profit, revenue, and cashflows. The annual long-term incentive for CEOs on average is 125 per cent of fixed pay.

Nitin Sethi, partner and CEO, India for Human Capital Solutions at Aon, said, “Over the past 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. 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.”

Pritish Gandhi, director and practice leader, India for the Executive Compensation and Governance Practice at Aon, said, “For determining LTI Quantum, Pay Mix, which is the LTI quantum as a percentage of fixed pay, continues to be the preferred method for India Inc. Progressive organizations are additionally looking at factors such as Total Target Ownership, which is LTI quantum as a percentage of equity, and Wealth Creation Potential, which is LTI Quantum percentage to target desired wealth creation at exercise, when determining LTI grants to compete effectively with new age start-ups. Companies must use a mix of performance and retention-based grants to retain their top executives.”