Govt.'s nod not required for CEO's pay hike
By siliconindia
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Monday, 21 September 2009, 22:59 IST |
4 Comments
Bangalore: Raising the salaries of Chief Executive Officers (CEOs) and directors will not require government's approval, once the new Company Law is passed. "Essentially, we are shifting from control to regulation, that's the basic theme of the proposed Company Bill and for CEO's salary coming to us for approval is not something in the regulatory procedure is called for," said Salman Khurshid, India's Corporate Affairs Minister.
Under the present Act, companies have to take approval of the government before raising salaries of the directors. "Let the shareholders decide, how much they want to pay someone but there must be disclosure, to us, to the shareholder, to the public at large," Khurshid added.
Though many have welcomed the move, there is also some concern with the implementation of this rule. "Such archaic provisions are not in conformity with the liberalized market environment. However, some checks and balances must be put in place to prevent CEOs from extracting disproportionate compensation packages for themselves," said Diljeet Titus, Senior Partner of the law firm Titus and Co.
"The companies should not come to us for permission. Whatever can be done should be known clearly; whatever can be done by the approval for shareholders should also be known and there should be transparent declaration and disclosure to shareholders," added Khurshid. The G-20 meeting of finance ministers and central bank governors at London discussed the issue of high salary and bonuses being paid by the banks.