Average CEO compensation in India up 40% as compared to pre-Covid: Survey

The number of CEOs earning more than Rs 20 crore has doubled in the last four years

The average yearly compensation of chief executive officers (CEOs) in India stands at Rs 13.8 crore, up 40 per cent as compared to the pre-Covid-19 year of 2020 when it was Rs 9.8 crore, a survey released on Monday showed.

It added that in the last four years, the number of CEOs earning more than Rs 20 crore has doubled.

The survey titled ‘Deloitte India Executive Performance and Rewards Survey 2024’, based on the analysis of 400 organisations (except public sector companies), said that 75 per cent of all CEOs in India now earn more than Rs 5 crore annually. This was 66 per cent in 2020.

The percentage of CEOs earning between Rs 5 crore and Rs 10 crore annually has decreased to 26 per cent from 35 per cent. But the percentage of those earning between Rs 10 crore and Rs 20 crore has increased from 22 per cent to 27 per cent.

The percentage of CEOs earning more than Rs 20 crore has doubled from 10 per cent to 21 per cent.

Promoter CEOs have an edge over professional CEOs

The findings of the survey showed that promoter CEOs hold an edge over professional CEOs when it comes to compensation.

In the last four years, the average compensation of promoter CEOs has jumped more than that of the professional ones.

For promoter CEOs, the average compensation has risen 14 per cent to Rs 16.7 crore from Rs 10 crore earlier. For professional CEOs, the average compensation has risen 8 per cent to Rs 13 crore from Rs 9.7 crore.

“Over the past four years, the ratio of promoter to professional CEO compensation increased significantly from 1.0 to 1.3,” it said.

However, the difference seems starker once looked at from a more granular level.

The percentage of professional CEOs earning more than Rs 20 crore has risen to 17 per cent from 12 per cent since 2020. But for promoter CEOs, the jump has been much sharper from 9 per cent to 36 per cent.

On lower compensation levels, the percentage change has been similar in the two types of CEOs.

According to Anandorup Ghose, partner and CHRO Programme leader, Deloitte India, the compensation of promoter CEOs has outpaced that of professional CEOs primarily due to two factors.

“Professional CEOs change more often than promoter CEOs due to the longer tenure of promoter CEOs as an aggregate,” he said, adding, “But it is also important to note that the range of promoter CEO compensation is very wide, and that affects the higher averages.”

Preference to home-grown CEOs

The survey also had an analysis of CEO changes in BSE 200 companies (excluding PSUs). It revealed that 45 per cent of companies witnessed a CEO change over the past five years. A majority of these preferred a home-grown or internally appointed CEO rather than hiring a new CEO from outside.

“6 out of 10 new CEOs were home-grown talent, i.e., either promoted internally (70 per cent) or hired from a group/parent company (30 per cent)," it said.

For the remaining companies, which hired a CEO from outside, 81 per cent preferred a person from the same sector.

Reducing prevalence of ESOPs

The survey also highlighted that the prevalence of stock options or Employee Stock Ownership Plans (ESOPs) in CEO compensation has reduced from 68 per cent to 49 per cent since 2019. More companies are giving out long-term incentives, based on performance, to the CEOs.

“We find that larger companies with more mature compensation practices are adopting performance shares faster, in line with global best practices,” it said.