There has been some discussions on the salaries of the CEO’s of a company.
Many believe that CEO’s are overpaid. The average salary of a CEO’s has been on a rise . As the industry is the progressing so as its complexity. The business environment is changing everyday,this change brings a lot of pressure on the company to sustain its margin.As business becomes more complex, the demand for top executives increases and thus they command greater and greater pay.Constant scarcity of ‘managing-business’ CEOs has also driven compensation high.The compensation is expected to further spiral upwards owing to the increasing cross-sector employability of CEOs and the new breed of ‘lateral CEOs’. It is the responsibilty of the CEOs’ to make the company more profitable then previous amid ever increasing competitive industry. If the Top level executives are working in a right direction then the whole company is benifited, but any decision went wrong they are one who have to suffer the most. The kind of risk that they handle is enormous so they are expected to get a higher compensation.
Now the question arises How Much is Too Much? It is the market that decide the average compensation or the company’s profit or combination of the both. There has been cases where the company has suffered when the CEOs’ has offered very little inspite of getting a fat pay. CEOs’ are being payed heavly even when the company has been in loss. There has been a standard in the industry that says CEOs’ must be paid as per the company performance or the profit earned. What CEO honestly believes that all or most of the appreciation in value of their company is due to their own talent? When a company grows is it only due to CEOs’? Company’s grows when every employee works hard for the company. When CEO’s salary of a company increases by 20-40 %, the average increase in the salary of the rest of the employee’s may only increase in the range of 10-15%.
The average annual compensation for a CEO in India stands at over Rs two crore and is nearly 2.6 times the pay package for other top business executives in the country, as per a new study.The study further pegged the average CEO compensation at “larger, more complex organisations” at more than Rs 7 crore.While the exact increase in the CEO pay levels could not be ascertained, the government data shows that India’s per capita income grew by 15.6% to cross Rs 50,000 level for the first time in 2010-11. It is expected to further cross Rs 60,000 level in the current fiscal, ending March 31, 2012.As per the data disclosed by listed companies, their top-management remuneration grew by 36% in 2010-11, while the rise in overall staff costs was about 18%.
Hay Group said its report was designed to enable organisations to understand prevailing compensation practices and trends, and assist them in formulating market-aligned and business-model affordable compensation for top executives.