Executive pay in the emerging economies in Asia, including India, is expected to match if not exceed those of counterparts in Europe and the United States by 2013.
Executive pay in the emerging economies in Asia, including India, is expected to match if not exceed those of counterparts in Europe and the United States by 2013, according to a report by Mercer Consulting.
Mercer’s Executive Remuneration Perspective also reveals pay at the top is rising disproportionately to performance.The distinction of being India’s highest-paid honcho goes to Naveen Jindal, executive vice-chairman and managing director, Jindal Steel & Power Ltd, whose pay packet is nearly ¤70 crore or ¤5.7 crore a month ($1.3 million).
But that’s one-seventh of what the highest paid American chief executive — Phillippe P Dauman of Viacom Inc — gets: $84.5 million or ¤376 crore a year. Broken down, that’s $7 million or over ¤30 crore a month.
Aon Hewitt, another talent research and advisory firm, suggests the salary gap between Asia and the west is closing fast even at current levels, especially if one were to look at purchasing power parity rather than direct exchange rate conversion.
Anandorup Ghose, head executive compensation and governance, Aon Hewitt, said the median salary of an Indian CEO ranges between ¤5.5-6 crore, whereas it’s closer to the $8 million mark (¤35 crore) in the US.
“The comparison might look startling, but if the purchasing power is adjusted, the difference is less than 25%. However, there are many Indian CEOs who pocket equal or more when compared to the US standards,” said Ghose.
What is startling though is that the median salary of Indian CEOs is 200 times that of an entry-level employee. As pay packets come into focus, the view is split on whether senior executives deserve the pay packets.
“We are likely to see greater attention paid to executives in Asia and, correspondingly, to whether or not they are deserving of these riches.” said Athar Siddiqee, strategic client relationship executive, Kenexa, a talen management consultancy.
Amitabh Das, founder & chief executive at Vati Consulting, a recruiting and staffing solutions firm, supports the higher pay scales especially as today’s executives constantly kept on their toes, in his opinion.
“I do not agree that executive salaries in India are exorbitantly high. Yes, Indian salaries have grown significantly at the executive level, but a large part of it is variable pay which is in tandem with the company’s performance and his own,” Das said.
“We have seen instances where executives have been unceremoniously sacked for not being up to mark with their performance.”
“Last five years have witnessed a 100% increase of salaries at the CEO level, and there is a 15-20% rise every year,” said Sunil Goel, director, GlobalHunt, which is involved in recruitment of executives for companies.
Rise in executive pay in industries such as banking, finance and manufacturing are often ahead of the reste of the economy, staffing consultants suggest. Not surprisingly, most of the top 10 highest paid chief executives in India come from family-run businesses.
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