Senior executives may get 8.9% salary hike in 2022, highest in 5 years: Survey

In 2022, the salaries of senior executives in India are likely to rise by 8.9%, highest in five years, and the median CEO compensation has reached ₹7.05 crore, according to a survey.

Aon plc, a leading global professional services firm, released its annual Executive Rewards Survey in India where it analysed data across 475 companies from more than 20 industries.

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With fundamentals of the economy remaining strong and business sentiments positive, there were strong tailwinds which resulted in top executives’ salary increase to be projected at 8.9% from 7.9% in 2021, the survey said.

“The main reasons for this high increase are strong business recovery and growth in the last 12 months and positive business outlook; huge demand for new-age talent with digital and tech skills at the senior levels; and increase in demand for senior-level hiring across sectors, which had been stalled over the last 18 months due to the pandemic uncertainty,” Roopank Chaudhary, partner at Aon, told Economic Times.

Moreover, the pay mix for chief executive officer (CEO) and key CXO roles continues to move towards higher pay at risk, as per the survey. CXO roles refer to common c-suite executives including CEO, chief financial officer (CFO), chief operating officer (COO), and chief information officer (CIO).

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As per the survey, Pay at Risk – which is the sum of variable pay and long-term incentives (LTI) to total compensation – for CEOs stands near 60%, while C-level executives including COO, CFO, sales head and chief human resources officer follow closely behind at 50%.

The annual LTI for CEOs on an average is 125% of fixed pay. Most companies use a mix of performance and retention-based grants, with at least 50% of the grant amount linked to performance measures such as shareholder return, profit, revenue and cash flows, according to the survey.

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

“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,” Sethi added.

(With inputs from Agencies)