Executive Salaries in India and West will be equal by 2013

According to a latest report by Mercer Consulting, the Executive pay in the emerging economies in Asia, including India, is expected to match if not exceed those of counterparts in Europe and the United States by 2013.

The report also found that, in India the Executive pay at the top is rising disproportionately to performance.

Notably, India’s highest-paid Chief executive is Naveen Jindal, executive vice-chairman and managing director, Jindal Steel & Power Ltd, who takes nearly Rupees 70 crore or Rupees 5.7 crore a month ($1.3 million). In comparison the highest paid American chief executive — Phillippe P Dauman of Viacom Inc — gets $84.5 million or Rpees 376 crore a year' taking $7 million every month. Thus India's Top salaried person takes one-seventh of what Viacom CEO receives each month.

Echoing the mercer forecast, another talent research and advisory firm, Aon Hewitt, suggests the salary gap between Asia and the west is closing fast even at current levels, especially if one were to look at purchasing power parity rather than direct exchange rate conversion. Purchasing Power Parity in simple means the equality in purchasing power at two countries or places. To know PPP, one has to look amount of purchasing a person can do, if he carries the equivalent amount of currency in to countries. That’s if one wants to know the parity OR equality in purchasing powers in US and India, then one has to look at the purchasing a person can do if goes to spend One dollar in USA and its equivalent approx Indians Rupees 44 in India. Countries that are considered cheaper have better PPP than those considered expensive; as one can buy more things with equivalent currency in a cheaper country, than in an expensive country.

According to Aon Hewitt, the median salary of an Indian CEO ranges between INR 5.5-6 crore, whereas it’s closer to the $8 million mark (INR 35 crore) in the US. But if Purchasing Power Parity is taken into consideration, then a higher PPP for India (more can be purchased with same amount of money) reduces the Top CEO Salary difference in India and US to just about 25%.
But Aon Hewitt underlines that there are many Indian CEOs who receive equal or more when compared to the US standards. But rather than the CEO salary itself, what is startling about ceo salary in India is that the median salary of Indian CEOs is 200 times that of an entry-level employee, says Aon Hewitt. An observation, which again echoes here, is the Mercer observation of the disproportion between the Executive pay at the top and performance.

One reason for the Executive pay in the emerging economies in Asia, growing closer to those of counterparts in Europe and the United States by 2013, is the greater attention paid to executives in Asia by companies, for obvious reasons (ample growth opportunities developing economies provide to these companies), note both reports. Hence according to some experts, the higher salaries are because of ever increasing work volume.

Notably, in Indian in the last five years salaries at the CEO level, have almost doubled and there is a 15-20% rise every year. --------

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