Perking up CXO packages

Big perk packages — be they corporate jet travel or exotic yacht parties — fell out of favour after the global financial crisis. They are now slowly making a comeback. A case in point is the salary structure of Mark Zuckerberg, CEO of Facebook. Last year, his salary was a measly $1 with no stock option whatsoever. His perks, however, were a whopping $5 million — of which $4.3 million was just for his personal security.

In contrast, the pay structure of Microsoft’s CEO Satya Nadella comprised perks of just $12,729 in 2015. Interestingly, his base salary was just over $900,000, while the cash bonus was a hefty $3.6 million.

Pay structures of Indian leaders are more like Nadella’s than Zuckerberg’s — with perks typically constituting a smaller proportion of the overall salary. But things are changing.

“The pay structure used to be very restrictive in the past. It is now gradually gravitating towards the American way of performance-led pay and perks,” says Sriram Vaidhyanathan, Chief Human Resource Officer at BankBazaar.

Gone are the days when employers would try to retain their top management with higher salaries or with some stock options thrown in.

“Salaries can be matched; so employers are looking for new and innovative ways of holding on to their key contributors,” says Smiti Bhatt Deorah, co-founder of Advantage Club, that structures corporate discounts for employee benefits. .

Multinationals, organisations run by professionals as well as start-ups — as against family-run businesses — are today eager to retain top talent by offering innovatively designed perks. “Even SMEs with 100-200 employees are keen to engage in discussions and look for innovative solutions,” says Deorah.

High-risk job

So, what is driving companies to perk up their CEOs’ salaries? It’s the complexity of the role that one has to don, feel the experts. Unlike in the past, where many companies were family-run, today, there is a shift towards professional management.

The top leadership has to not only infuse professional management into the organisation by ridding it of its past baggage, but also deliver quantifiable results within a short period of time.

“The risks are high and there are only a limited number of people who can take up these roles,” says Vaidhyanathan.

Perks fit well with the employers’ requirements of going beyond financial pay-offs to sweeten the package of a CXO — a term used to collectively refer to senior corporate executives whose designation starts with ‘Chief’ and ends with ‘Officer’.

Such perks do not break the bank and yet drive home the message of being employee-friendly.

Flexibility in structuring perks is another carrot. United Spirits has a concept called ‘Basket of Allowances’ that enables employees to customise their compensation structure based on their expense patterns, lifestyle choices and tax optimisation plans, according to Steve Correa, Executive Vice President and Head – Human Resources at United Spirits. For instance, you can take a BMW on lease and give up on, say, housing allowance.

Likewise, office location can be chosen taking into consideration the commute time of those in leadership positions.

Extended break from work is also a rare perk that is sought after. S Krishna Prakash, Managing Partner, EMA Partners, an executive search firm, says that akin to Silicon Valley-based companies such as Intel and Google, Flipkart and Pepperfry are also looking at sabbatical options.

Secondly, rather than just hand-over the money, companies are looking at ways to add value.

“Companies, for instance, work with real estate developers so that CXOs can buy property — to live in or as an investment,” says Sourabh Deorah, CEO, Advantage Club.

Also, perks are designed to be lifestyle-driven with a focus on family, says Krishna Prakash.

For instance, generous leave and work-from-home options for parents are common. Companies, such as Cisco, treat the leave taken to care for a family member as the employee’s sick leave.

Relocation benefits today go beyond mere fancy serviced apartments. Imagine moving to a new city in the middle of a school year and trying to get admission for children in a reputed school.

Employers are now forging alliances with reputed international schools so that executives get admissions on preferential basis.

“School seats are booked in advance and the company bears the cost if those seats are not filled,” says Deorah.

Family travel is another perk in which tickets to Olympics or a special music concert may not be so hard to get.

Special locations, preferential service deals and ensuring availability during peak travel seasons may be other travel privileges, CXOs and their families can look forward to.

“Often when the primary purpose of the travel is social, these privileges from the company enhance the employee’s ‘feel good’ factor,” says Krishna Prakash.