CEOs of Indian companies get nearly 4% compensation hike in FY22

The Chief Executive Officers (CEOs) of Indian companies got an average hike of 4 per cent on their compensation in FY22, reported The Economic Times. This is a moderate increase from the pre-pandemic period.

According to members of nomination and pay committees of several blue-chip corporations, there is a growing trend of linking CEO salaries to results and performance.

An ET analysis, which included 220 BSE 500 companies for which data was available, shows that the average increase in the pay of captains of Indian industries- CEOs and MDs was higher than the 1 per cent rise seen in the FY21, but less than the average hike of 7.5 per cent recorded during the pre-Covid period. The data studied during the analysis included salary, bonus, allowances, commission and other benefits. However, it excluded long-term equity linked incentives and pay hikes from promotions.

Arun Duggal, chairperson of ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) and an independent director on many boards, told ET, "The top factors affecting CEO compensation are the company’s performance and company outlook. The focus is on a strong linkage."

Shailesh Haribhakti, chairman of audit and accounting firm Haribhakti & Co, who is also an independent director at several Indian companies said that the evaluation of the CEO's performance and co-relation with strategic issues is emerging more strongly. He said, "The conversation in the boardroom is about fairness in compensation of CEOs and it is getting linked very strongly to outcomes and performance. Companies are looking at more variable than fixed component with share-linked compensation becoming a significant proportion of the total package."

The average salary for MDs and CEOs in FY22 was Rs 6.54 crore, up from Rs 6.31 crore in FY21 and Rs 6.22 crore in FY20.