Interesting notes on executive compensation from Deloitte’s 2024 India executive performance and rewards survey report. Noticed a related discussion on ET TV. According to Deloitte report site, their survey covers information from over 400 companies across all major sectors.

In general, executive compensation continues to grow, and evolve fast with the market. Senior leadership roles come with much higher complexity, risks, stress and decreasing tenure. All the more reason for CEOs to have sounding boards and coaching support.

According to a Mint analysis of data from the past decade (2020), a CEO or MD of an average BSE 500 company stayed in the role for 3.4 years. Fewer than half of Indian CEOs completed three years in office. The tenure varied with industry and women were underrepresented. The global average for the world’s largest 2500 companies during 2004-18 was 5 years (PwC study).

Regarding age, “in NSE-500 companies, a typical Indian CEO today is 57 years old (roughly similar to Fortune-500 firms, where the average age of the top executive is 57.7 years). For the mid and small sized companies, the average age of CEOs comes down to about 50-52 years.”

Notes from the Deloitte 2024 report:
* About 45% of S&P BSE 200 companies (excluding PSUs) witnessed a change in their CEO incumbent over the past five years.
Almost six of every 10 new CEOs have been internal promotions. Amongst homegrown CEOs, business heads or CEOs of other group/parent companies were chosen to be the successors. In case of external hires, 81% of the new external CEOs were sourced from the same sector.
* About 3 of every 4 CEOs in India now earn more than INR 5 crore [approx. USD 596,000].
* Faster increase in promoter CEO compensation compared with professional CEOs.
* Average CEO compensation in India stands at INR 13.8 crore [USD 1.6 million], up 40 percent compared with pre-COVID times.
* Fixed pay for promoter CEOs now constitutes over half of the total pay. For professional CEOs, pay-at-risk (Short Term Incentives + Long Term Incentives) is much higher at 57 percent of the total pay.
* Companies assess CEO performance holistically but largely link only financial performance to incentives.
* The prevalence of stock options or ESOPs dropped from 68% to 49% over the past five years despite more companies using LTI. Larger companies with more mature compensation practices are adopting performance shares faster, in line with global best practices.
* The wide gap between median and average CEO compensation [INR 9.3 crore versus INR 13.8 crore] indicates the wide range of compensation numbers and some outliers on the higher end.
* After the CEO role, COO and CFO roles continue to command the highest compensation premiums (followed by CHRO role).

References:
* Old is gold, but new-age cos…; Feb 6, 2024
* The average Indian CEO lasts less than 4 years…; Mint, Updated Oct 2020
* Deloitte 2024 Executive…Rewards Survey Report; Apr 2024