Retention toolkit: India Inc readies golden handcuffs to arrest CXO attrition

economictimes.indiatimes.com:

Many companies are tightening top executive contracts to bind them in longer associations where an abrupt exit of a C-suite executive can potentially cause severe business disruption and financial loss.

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A toolkit to bind the CXOs may include measures like longer tenure employment contracts (five years versus three years) and longer notice periods (six to nine months) as compared with three months earlier, according to the CXO search consultants. Many companies are also boosting the variable component of a CEO or CXO pay package with backloading of long-term incentive (LTI) payments.
«Increased variability in pay is the trend. The variable pay includes short-term incentives (annual bonus) and long-term incentives (cash/equity),» said Arvind Usretay, senior director, commercial leader — India & South Asia, Mercer Consulting (India).

The variable pay could be 50% or more of total pay in some cases. «More organisations are embracing performance shares as part of a portfolio approach for LTI. They are usually combined with RSUs (restricted stock units) or ESOPs (employee stock ownership plan),» Usretay added.


This comes when many executive search consultants are facing an increase in time taken to close a CXO or CEO vacancy. «It takes a minimum of 6-8 months from the time a search starts to the final appointment (including notice period to previous company). Pre-pandemic, it was quicker with time taken to fill role being anywhere between 4 and 6 months,» said R Suresh,