India Inc pays much more to CEOs than CXOs, says study

MUMBAI: Chief executive officers (CEOs) in India are paid considerably higher compensation than executive directors, popularly known as CXOs, says a study.

"CEOs' pay is considerably greater than the pay of other Executive Directors (CXOs)," a report by the Hyderabad- based Indian School of Business (ISB) has found.

The study, `Executive Compensation in India', covering 2,500 top companies in the country, was released here today. It shows that the real value of both CEO and CXO compensation has been witnessing a sharp spike in the recent years.

The study, however, pointed out that though pay package of CXOs rises with the size of the company, this is less than that of CEOs.

It found that the compensation of CEOs and CXOs are higher for firms which are part of large business groups.

"CEO and CXO pay is considerably higher (about 30 per cent for both CEOs and CXOs) for firms that are part of large business groups and increases significantly with the proportion of promoters' equity."

The study noted that CXO pay is less sensitive to stock market movements. "CXO pay has a much lower sensitivity to stock market movements and hence a much lower variation across time."

Referring to policy implications from this study, it said domestic policy should be at par with global standards.

"Current tools in executive compensation law and policy may not be fully cognisant of the role of vertical and horizontal agency costs," it said, adding that disclosures and corporate oversight, among others measures, must be meaningful and fulfil the intended regulatory rationale.