India CXO Salaries May Go Up in 2023

After two years of tough times when business was sluggish and remunerations down, top-level executives across companies in India could expect salary hikes in the range of 9% during 2023, a new study says. 

The study by Aon as part of its Executive Rewards Survey says while the hikes that senior management received in 2022 was more a result of pent-up impact from the previous years, this year things could change for the better. The research company says it analyzed data from 519 companies across India covering 25 industries for the survey. 

A report published in the ET quotes Pritish Gandhi of Aon to suggest that the increments were low in 2022 and a large number of the senior staff had to forgo variable pay. In 2023, the survey expects average hikes to be around 9.1%, which is lower than the 9.7% recorded in 2022 when salary hikes saw a post-pandemic correction. 

CEO compensation went up in 2022, but there’s a catch

The report says average CEO compensation stood at Rs.8.4 crore in FY23, which represented a 21% increase over four years. This number stood at Rs.7.05 crore during the last financial year, the report said. Gandhi was quoted as saying that the proportion of CEO ‘pay at risk’ rose from 50% to 60% over the previous five years. 

This number in the United States stands at 87% of the total compensation and refers to the sum of performance-based variable pay and long-term incentives. For now, the salary hikes for top executives remains under the lens with pay at risk being the key factor. The emphasis is on the value that these executives bring to the company. 

CFOs get the best deal, CTOs are in second spot

The survey further highlighted that the CFOs were the highest paid amongst the C-suite in most of the BSE-100 companies that were part of this survey. The average total cost to the company stood at Rs.3.99 crore, which was followed closely by the CTO, whose average package stood around the Rs.1.97 crore mark. Earlier it was the COO who stood second behind the CFO. 

The shift in favor of the CTOs could be a result of the roles they play in the digital transformation programs that many companies are implementing or have implemented through external vendors. It could also suggest the value that a tech mind brings to a traditional business in these exciting times when digital is the way to go. 

ESG, diversity matter too

Coming to board members and senior managers, a third of the companies surveyed said they were focusing on enhancing diversity levels. These boards were also embedding ESG factors, diversity and succession metrics with both long-term and short-term goals for CEOs and other members of the C-suite. 

Coming to the entire pay-at-risk package, the long term incentives component has gone up to 40% of the total compensation during FY23, from the levels of around 26% in 2015-16, suggesting that enterprises and its boards want the top executives to be tied down to a longer period of time with the company, instead of moving in and out within two years. 

Among the top 30 companies listed on the BSE, the CEO’s long-term incentives stood at Rs.10 crore or roughly 176% of their average fixed pay. For others such as the COO and CFO, this number stood around 104% of the fixed pay, the survey says, adding that compensation and associated governance remain a crucial factor for companies building a resilient workforce.