Pay packages of top brass in India, China to rise sharply

Tuesday, 28 June 2011, 07:37 Hrs   |    1 Comments
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NEW DELHI: Top executives in Asia Pacific region, especially in countries like India and China, are likely to witness rapid rise in their pay package this year, and their renumeration in the next three years is likely to surpass of those in the U.S., says a survey.

According to HR consulting firm Mercer's latest Executive Renumeration Perspective rapid growth, talent shortage and inflation in countries like India and China have created record increases in executive pay.

This is ushering in a new trend wherein employees in Asia are paid more than their contemporaries in Europe and the U.S.

"Global growth, regional hotspots and executive talent shortages are leading to a dramatic change -- by region -- in pay for performance and executive renumeration program design and governance," Mercer said.

Executive salaries in Asia are already higher than the Europe and with an annual increase rate higher than in the US, we expect Asian executive salaries to surpass those in the US within the next two to three years, the report said.

The average executive salary is increasing by 7 percent across the Asia Pacific region, while in Europe and North America it is growing at approximately 2.5-3 percent.

Last year average executive salary in Asia surpassed the salary in Europe and is on track to surpass those in the U.S. by 2013. In the Middle East executive salaries have already caught up with those in the Europe.

The contributing factors for the rapid rise in executive pay in the Asian region include continued strong growth its industrial production and GDP, accelerating inflation across the region, scarcity of executive talent and difficulty in filing executive positions, the report said.

China, India, Indonesia, Vietnam, the Philippines and Malaysia are among the countries poised to see rapid rise in executive pay.

The report further noted that executive pay in India is likely to see resurgence of equity-based pay and greater pay governance -- greater scrutiny by boards on fair use of renumeration benchmarks, increased use of performance criteria and more clawback positions.

Besides, lack of talent has led to a rise in renumeration at senior levels at a rate disproportionate to performance delivered. This imbalance will lead to linking a greater portion of the pay to value delivered, Mercer said.

"Companies should ensure that they keep a sufficient component of the pay as variable and flexible so that they only pay for measurable performance, so that the total renumeration levels are sustainable over time," Mercer said.
Source: PTI
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