According to a report by Deloitte, the average CEO compensation in India has seen a significant increase, reaching ₹13.8 crore, which is a 40% rise compared to pre-COVID-19 times. The report also highlights that more than half of the overall remuneration for CEOs is tied to short-term and long-term incentives.
The Deloitte India Executive Performance and Rewards Survey 2024 reveals that CEOs who are also promoters or members of the promoter family receive higher compensation, with an average of ₹16.7 crore. This disparity is primarily driven by two factors. Firstly, professional CEOs tend to change positions more frequently than promoter CEOs due to the longer tenure of promoter CEOs on an aggregate level. Secondly, the wide range of promoter CEO compensation impacts the higher average figures.
Deloitte further emphasizes that over 50% of CEO compensation is categorized as ‘pay-at-risk’. For professional CEOs, tThe report highlights that CEO compensation in India has experienced high-single-digit annualized growth rates. The wide gap between median and average CEO compensation (₹9.3 crore versus ₹13.8 crore) indicates the presence of compensation outliers on the higher end.
When evaluating CEO and CXO (Chief Experience Officer) performance, most companies adopt a holistic scorecard that incorporates a mix of financial and non-financial metrics and targets. However, incentives for CEOs and CXOs still tend to prioritize financial company-level goals within these scorecards.
Regarding long-term incentives, Deloitte notes that the percentage of companies utilizing share-based incentives has continued to rise (75% in 2024 compared to 63% in 2020), while the prevalence of stock options, or ESOPs, has decreased (49% of companies in 2024 versus 68% of companies in 2020).he pay-at-risk percentage is 57%, surpassing the 47% for promoter CEOs. Additionally, professional CEOs have 25% of their target compensation delivered through long-term incentives, often in the form of share-linked incentives.
Anandorup Ghose, Partner and CHRO Programme Leader at Deloitte India, mentions that large Indian companies with more mature and globally aligned compensation practices are shifting towards Performance Shares and multiple incentive plans for different employee cohorts. Boardroom discussions have also evolved from the necessity of share-based payment to the return generated from these incentive structures for stakeholders.
An analysis of CEO changes in BSE 200 companies (excluding PSUs) reveals that 45% of companies experienced a CEO change over the past five years. Of the new CEOs appointed, six out of every ten were internal hires, while the remaining four were external hires.
The Deloitte India Executive Performance and Rewards Survey 2024, launched in September 2023, involved the participation of more than 400 organizations in a B2B India-specific survey, excluding any public sector companies.
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