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CEO pay fatter, employers get hotter

india Updated: Oct 16, 2006 20:30 IST
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There are downsides to a job that earns a cool Rs 3.5 crore a year. The Chief Executive Officer (CEO) of the Indian unit of a global company, wishing to remain unnamed for fear of penalty, talks of the bother of proving his worth each time there is a shuffle in the American headquarters and he gets a new boss.

 

Such experiences among CEOs today, as they move jobs on an average every three to five years, are dictating terms and modifying the classic CEO package. CEO pay packets have zoomed and Indian companies are often hotter than multinationals as employers.

 

CEOs  increasingly want opportunities with fast-growing Indian companies. The glitz of foreign shores is fading. Even South East Asia, attractive until recently, is now taking a backseat. Dinesh Mirchandani of head-hunting firm Boyden International receives 200 resumes weekly from senior-level managers of Indian origin wanting to return.

 

Indian top jobs are getting increasingly attractive on both the crucial fronts: compensation and opportunity. Even five years ago, CEO hire for Rs 1 crore a year made news. CEO compensation has now touched international levels and fast-growing industry players are paying up to Rs 4 crore for the best man.

 

Shashi  Kalathil, CEO, Nimbus Sports Broadcast, says, “Jobs today have more accountability, shorter delivery time with no job security. Newer industries and players lead to more fluid projects. So the employer has to compensate. ” Kalathil started RPG Cellular, India’s first cellular company that did not really take off then.

 

This year India has hired about 500 CEOs, according to industry sources. As the economy grows, it could hire up to 5,000 in five years. The high packages — as the cost of living here is relatively low on a global scale — could yet see no correction as long as the economy booms.

 

We will see many professional millionaires soon,” says Mirchandani.

Telecom, retail, information technology and IT-enabled services (ITES) are the leading pay masters. Something like US-style signing bonus seems to be in.

 

The new package now includes a joining-in bonus or a ‘golden hello’ to compensate the losses of exiting the previous job,” says K Sudarshan, managing partner, EMA Partners. This did exist earlier also but now it is almost mandatory.

The amount has grown manifold from Rs 10 lakh to Rs 50 lakh on an average, and in some cases, even a year’s salary. This is because employers, to curtail attrition, are designing packages with staggered compensation, especially the returns on stock options. So the exiting CEOs stand to lose a lot more than they did earlier. Then there is the ‘golden parachute’, or the risk compensation factor, to ensure a soft landing if a project does not take off

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