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CEOs are now paid more, but half of profits are ‘at risk’

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  • The average wage of a Director is about ₹10-11.2 crore – higher than pre-pandemic levels.
  • The risk component represents on average 51% of a CEO’s pay.
  • The average compensation of a CXO is over ₹3 crore, and almost 40% of the total wage is at stake.

The CEOs of Indian companies seem to be doing well. According to a report by Deloitte, the average salary of a CEO is around 10-11.2 crore, which is higher than before the pandemic.

However, more than half of total compensation consists of pay at risk, according to the 2022 report of the Deloitte India Executive Remuneration Survey. Pay at risk is the part of an employee’s compensation that is variable, meaning that it is there is a risk of not being paid out.

According to the report, this risk component makes up an average of 51% of a CEO’s pay.

“The realized gain of this component could drop to zero in the event of a poor stock price or fundamental company performance,” the Deloitte report says.

Risky or otherwise, organizations seem eager to pay compensation for their top headlines. However, they want to make sure that the health of their business is good enough to afford it.

The report surveyed more than 470 companies in India about the amount and structure of executive compensation. The report has used a consistent definition of pay and approach to value long-term incentives such as stock options.

C-suite pay increases too, but with riders

The C-suite reward has also improved as the CXO reward returned from 2021 levels.

According to the report, the average compensation of CXOs is more than ₹3 crore and nearly 40% of total wages are at risk. Besides CEOs, chief operating officers and business heads are the highest paid CXOs.

For CEOs, 84% of short-term investment (STI) is dependent on business performance, while for CXOs this percentage is 50%.

“Nearly 80% of companies prefer a targeted approach to determining STDs. We find that 60% of companies use long-term incentives. ESOPs remain the most widely used type of LTI instrument,” the report continues.

Companies have changed their LTI plans after the IPO


According to the report, one in three companies that have recently gone public has changed their LTI plan during the transition. In the past year, there are many technology companies like Zomato, Delhivery, Nykaa and Policybazaar.

A nearly 50% drop in the annual share burn rate of recently listed companies is also observed when comparing their pre-IPO subsidy patterns with their post-IPO LTI patterns.

Two in five companies in India had at least one CEO change since 2016, while one in three companies hired new CEOs externally. Of every three externally hired CEOs, two held a CXO-level position in the previous company, the report said.

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