Richer rewards for India's CEOs

India Dispatch: CEOs in India are enjoying bigger pay packets, putting them on par with their overseas counterparts.

Naveen Jindal of Jindal Steel & Power is India's highest paid chief executive. Prashanth Vishwanathan / Bloomberg News
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Manish Kapoor is an MBA student at Mumbai University. At just 22 years of age, he has a big dream: he wants to run his own company by the time he is 30.

"I am determined about my future. To be a CEO is something I had wanted since I was a teenager," he says.

Because Mr Kapoor was born and bred in Mumbai, staying close to his family plays an important part in his plans.

"If I have to go and work overseas for few years, that is fine. But ultimately I'd like to be a head of a listed Indian company, right here in Mumbai, to make my family proud. It will all depend on the job, salary and other conditions of course," he says.

Mr Kapoor's dreams may be attainable as recruiters say salaries for Indian chief executives are inching closer to those of their global counterparts, and business leaders may no longer have to go abroad to make top dollar.

The average chief executive's annual compensation in India has crossed US$400,000 (Dh1.4 million), says the consultancy Hay Group. Salaries in India are also comparable with those in the West, thanks to the economic situation, which makes India a more desired place for future chief executives.

"We have noticed MBA students have started thinking about getting their jobs in the home market after the recession hit overseas," says Rajesh Kumar, the chief executive of MyHiringClub.com. "In addition, India Inc had started to make their salary structure almost comparable to the West, keeping in mind the cost of living and other factors of the West."

The chief executive's role has also changed, according to recruitment specialists, which has in turn contributed to the rise in salaries.

"The Indian CEO market has traditionally thrown up a number of CEOs who are excellent at managing operations but are lacking a longer-term focus," says Sridhar Ganesan, a rewards practice leader at Hay Group India. "Thus, there is a scarcity of CEOs skilled at taking a larger view of business as a whole, and this demand-supply mismatch drives CEO compensation higher."

Another study by the recruitment consultancy Aon Hewittcalculated the Indian chief executive's salary to be closer to $1m, taking into account complex calculations of purchasing power and standard of living in India.

But this salary is still far away from that of American counterparts. A US chief executive can expect a top-level salary twice that of his Indian counterpart. According to Aon Hewitt, a US boss these days can command a salary on average of about $2m.

On the other hand, a European chief executive's salary is closer to his Indian counterpart's than to the American's, with EU bosses able to command average salaries of $1m to $1.3m, the survey said.

Recruiters say sentiment against huge executive pay has risen in Europe. The continent's poor economic status is another reason that EU executive bonuses are lower.

More European chief executives are coming to the Indian market, thanks to competitive packages.

"With salaries now touching global level, they are able to attract more CEOs even from global market," says Mr Kumar. "In the last two years, we are seeing an increase in the recruitment of CEOs in the domestic market. After recession hit Europe, India Inc had hired more expat CEOs compared to before because they are now more affordable."

India is also trying to tidy up its "fat cat" culture. A proposed companies bill, due to be voted on this month, proposes that chief executives' compensation be limited and that shareholders be given the right to vote on compensation for top executives.

Salman Khurshid, the corporate affairs minister, said last year that companies should not pay their top brass "vulgar salaries".

Manmohan Singh, India's prime minister, has also voiced his concern on the subject.

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