Salaries: CEOs Drive A Hard Bargain

IN FY24, IT services company Wipro paid former CEO Thierry Delaporte $20.1 million, making him the country’s highest paid professional CEO. After his exit in April, his “terms of employment” entitled him, among other things, to accelerated vesting of 9,89,130 stock options and $4.33 million cash. Nearly three-fourth public shareholders voted against this one-of-its-kind cash compensation in Wipro’s history. While the vote may not have a bearing on the outcome given that the promoters have a vast shareholder majority, it is a live example of hard-bargaining by CEOs to protect their earnings.

Deloitte India’s latest executive performance and rewards survey has found that the average CEO in India was paid ₹13.8 crore in 2024, 40% more than pre-Covid times. It says the number of CEOs earning ₹20 crore-plus has doubled over past four years and more than 50% CEO compensation is now based on short and long-term incentives. For promoter CEOs, fixed pay is now half the total compensation, while for a professional CEO, short and long-term incentives are much higher at 57%. The study shows that as India aims to become the world’s third-largest economy, India Inc. is no longer shying away from duly compensating its top executives. But CEOs increasingly expect fat pay checks.

The Tech Sector

Technology company CEOs have been traditionally paid the most. Apart from Delaporte ($20.1 mn or nearly ₹167 crore), HCL Tech’s C. Vijayakumar took home $10.06 mn or nearly ₹84 crore, which included $2.36 million cash component of long-term incentives and $4.56 million as perquisite value of performance-based restricted stock. There was also a performance-linked bonus of $1.14 million. Persistent System’s Sandeep Kalra, who joined the company in 2019, took ₹77.1 crore — while salary & allowance was ₹8.3 crore, performance-linked incentive was ₹2.1 crore and perquisites and other components were nearly ₹63.7 crore. Salil Parekh, CEO & MD of Infosys, earned ₹66.2 crore, while Mphasis’s Nitin Rakesh took home ₹44.1 crore in FY24. At India’s largest IT services company, Tata Consultancy Services, CEO K. Kritivasan earned ₹25.3 crore. Barring Mphasis’ Nitin Rakesh, whose compensation fell over 20% from FY23, others saw a healthy uptick.

While these India IT companies may have a large global presence, a comparison between them and western counterparts is difficult, says Navnit Singh, chairman and regional managing director of India for Korn/Ferry International. However, over last few years, thanks to growth of multiple sectors, CXOs have been earning more and more, whether as bonus or fixed salaries. “A lot of CEOs are focusing on stocks and wealth. They may join even at an equivalent salary as long as they see a pot of gold at the end of the rainbow,” says Singh.

Apart from technology, sectors with ₹20 crore-plus remuneration for those are the top include auto/mobility, cement and life sciences/pharma. Jayadev Galla, chairman & CMD of Amara Raja Energy & Mobility Ltd., was paid ₹63.3 crore, including nearly ₹61 crore in commission. Bajaj Auto CEO & MD Rajiv Bajaj took home ₹53.7 crore while Mahindra and Mahindra CEO & MD Anish Shah earned ₹24.2 crore, up 47.3% from previous year.

In pharma and life sciences, Syngene CEO & MD Jonathan Hunt, one of the few expat CEOs in India, took home ₹28.6 crore, including fixed pay+bonus of ₹14.2 crore and ₹14.2 crore in stock options. Lupin’s CEO Vinita Gupta got ₹23.5 crore while Divi’s Labs CEO Kiran Divi was paid ₹22.7 crore (₹21.26 crore on the basis of net profits). In cement, Bajaj Holdings Investment Ltd.’s Sanjiv Bajaj took home ₹27.1 crore, Madhav Krishna Singhania, deputy MD & CEO of JK Cements, drew ₹23.9 crore, up 54% from last year, while Dalmia Bharat’s Puneet Yadu Dalmia got ₹23.3 crore. In FMCG, Marico MD & CEO Saugata Gupta’s remuneration stood at ₹23.7 crore. Shiv Agrawal, managing director at ABC Consultants, says average CEO compensation has gone up substantially. With focus on wealth creation, “it is not just fixed component that is going up but also elements like target-based sums and equity/ESOPs,” he adds.

Ring-Fencing Wealth

In well-established companies and those perceived stable, CEO remuneration is being seen through a lens of relative value addition. According to the Deloitte survey, for professional CEOs in India, pay-at-risk (short-term plus long-term incentive) is higher while for promoter CEOs, fixed component has moved up over the years. For professional CEOs, in 2020, fixed pay component was 45%, short-term incentive was 26% and long-term incentive was 29% of total pay. In 2024, these stood at 43%, 24% and 33%, respectively. However, in case of promoter CEOs, fixed pay was 49% and short-term incentive 51%. In 2024, these were 53% and 47%, respectively.

The mindset has reached a stage where instead of the absolute number, CXOs are focused on getting a fair share of the value they create in an organisation, says K. Sudarshan, MD India & Regional Chair Asia, EMA Partners. With focus on wealth creation, Indian companies are building an edge over MNCs in attracting talent. “Indian companies have a little bit more open architecture approach towards compensation. Multinationals have far more rigid frameworks. Today, you will find more managers moving from multinationals to Indian companies,” he adds. Faced with choices, potential CEOs are becoming picky about companies. Negotiations have become multifaceted with reputation of the company and age of the CEO becoming major factors. “While for CEOs who are 50-plus, how much money one gets becomes the primary driver, younger CEOs see a lot of room for negotiation where a company is willing to share profits,” says Navnit Singh.

In past three-four years, new-age companies preparing for IPOs have also been hiring CEOs with vast experience. However, most incumbent executives still consider these companies as ‘high risk,’ say industry experts. Take Paytm Payments Bank, which hired Surinder Chawla, a veteran banker who was earlier with RBL and HDFC, in January 2023. He resigned in 15 months. Kartik Gupta, former VP & regional CFO of P&G, and Hemant Bakshi of HUL, lasted only a few months in Ola Cabs. “When an incumbent CEO sees it as a high-risk opportunity, we see a lot of exit parachute clauses (being added to job contracts),” says Agrawal, adding that more and more people are negotiating protection clauses if something beyond their control goes wrong.

However, one sector that seems to be clearly not paying its top executives large compensation is banking and financial services, owing to regulations by Reserve Bank of India. Here, private banks have a huge edge over public sector banks. State Bank Of India ex-chairman Dinesh Khara earned just ₹37 lakh in FY23. But Sashidhar Jagdishan, MD and CEO, HDFC Bank, earned ₹10.5 crore while Amitabh Chaudhry, CEO, Axis Bank, took home ₹9.7 crore. Sandeep Bakhshi, CEO, ICICI Bank, earned ₹9.6 crore. While it is rare to see a banking CEO move to a different sector, for them, a stock or a long-term incentive plan becomes that much more important, says Singh.

Industry watchers say the upward trajectory of CEO compensation is here to stay, while the quantum may differ depending on ups and downs of a company. With manufacturing and niche industries like semiconductors expected to take off, CEOs from these sectors could get added to the list of top paid executives in the coming years.