Top Indian executives now to get performance-linked pay

June 27th, 2011 - 4:09 pm ICT by IANS  

New Delhi, June 27 (IANS) Top executives in India will see their pay being increasingly linked to performance due to rapid increase in remuneration levels in recent years and increasing instances of inadequate delivery, said a survey released Monday by a global human resource consulting firm.

The survey by Mercer said, “There will be greater pay governance at senior levels due to rapid pay increases in prior years and increasing instances of inadequate delivery by the senior team.”

“This will mean greater scrutiny by boards and compensation committees on fair use of remuneration benchmarks, increased use of performance criteria and more clawback provisions,” it added.

Clawback provisions refer to clauses in a employment contract that allow companies to take or hold back components of pay if certain performance criteria are not fulfilled by the employee.

With the economy rebounding after the global economic slowdown and growing at a robust rate, there is considerable pressure among companies to retain top talent.

Mercer also said that the top trend in 2011 in India was a likely resurgence of equity-based pay structure at middle-management levels in smaller companies.

This sort of pay structure would, however, become an added cost on the books of companies as most firms were moving to international financial reporting standards.

The survey also said that rapid growth, shortages in leadership positions and high inflation in countries like China and India had created record increases in executive pay.

Last year average executive salaries in Asia surpassed those of Europe and they are on track to surpass those in the US perhaps in 2013, Mercer said.

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