Stop paying vulgar salaries, Khursheed tells India Inc

Stop paying vulgar salaries, Khursheed tells India Inc

Shareholders must have a say in CEO remuneration, says minister

That is what the United Progressive Alliance (UPA) government’s suggestion to the corporate world seems to be, going by Corporate Affairs Minister Salman Khursheed’s comment that corporate India should stop doling out ''vulgar'' salaries.

Indicating that the government would keep a tab on corporate salary structures, Khursheed said: “A minister should not be judging who deserves what salary. We are moving away from control to regulation. But it does not mean that you are going to be completely free,” he said replying to queries from reporters here on Sunday.

“I do not think anyone in India today, in politics or outside politics, has reached the level of liberalism where vulgarity is also a fundamental right,” he said, though he added that salaries of Chief Executive Officers should be decided by shareholders of respective companies.

Also, the remuneration of company Chief Executive Officers would be debated by the Parliamentary Standing Committee currently scrutinising the provisions of the new Companies Bill tabled in Lok Sabha in August, he said.

“Let’s get the opinion of the standing committee (on the Bill), then we will move forward,” he said, pointing out that “it’s now before the same Parliament that has supported this attitude of austerity. Let us see what their views are.”

Promoting austerity

The annual renumeration of some Chief Executive Officers work out to be Rs 50 crore, which is more than 12,500 times the per capita income in the country.  Under the present Companies Act, companies have to take approval of the government before raising salaries of directors, if the increase is beyond a threshold.

Noting that the issue of Chief Executive Officer’s pay packages cannot go unnoticed, Khurshid said, “Prime Minister Manmohan Singh’s indication to industry (has to be taken)... with paramount importance today, particularly we are trying to promote, inculcate a culture of austerity.”

No final decision

“Nothing is to been in isolation. We have to see on what accountability and what responsibility is to be imposed on directors, Chief Executive Officers  of companies. We still haven’t taken a final view on whether two persons can be taken as chairpersons and managing directors,” the Corporate Affairs Minister said.

Remuneration should be commensurate with the qualifications of the individuals and time they spent, he said, adding there should be transparency in the working of various committees of a company.

“The bottom-line should be the shareholders, but the shareholders are not supposed to decide things blindly. Shareholders also must decide in certain context after particular information is made available to them,” he added.

DHNS & Agencies