Indian CEOs’ Average Salary Increased by 40% to Around Rs 14 Crore from Pre-Covid Level: Deloitte Report

The Deloitte India Executive Performance and Rewards Survey 2024 reports that the average compensation for CEOs stands at Rs 13.8 crore. Meanwhile, CEOs who were also promoters or members of the promoter family are paid an average of Rs 16.7 crore. This trend is primarily driven by two factors.

One, professional CEOs change more often than promoter CEOs due to the longer tenure of promoter CEOs at an aggregate. Two, the wide range of promoter CEO compensation affects the higher averages. According to Deloitte, over 50 percent of target compensation for CEOs is ‘pay-at-risk’.

Professional CEOs have a much higher pay-at-risk percentage at 57 percent, compared to 47 percent for promoter CEOs. In addition, 25 percent of the target compensation for professional CEOs is delivered through long-term incentives, typically paid through share-linked incentives. The survey also indicates that CEO compensation in India has seen high-single-digit annualized growth rates.

The wide gap between median and average CEO compensation suggests a wide range of compensation numbers and some outliers on the higher end. While assessing CEO and CXO performance, most companies use a holistic scorecard that includes a mix of financial and non-financial metrics and targets. However, incentives for CEOs and CXOs are mostly focused on financial company-level goals within those scorecards.

Furthermore, the survey reveals that the percentage of companies using share-based incentives has increased, with the prevalence of stock options or ESOPs on the decline. There has been a shift in boardroom conversations from the need for share-based payment to the return from these incentive structures to stakeholders. In analyzing CEO changes in BSE 200 companies (excluding PSUs), it was found that 45 percent of companies witnessed a CEO change over the past five years.

Six of every 10 new CEOs were internally appointed, while the remaining four were external hires. The survey was conducted with the participation of more than 400 organizations in B2B India, excluding public sector companies.