Who Will Decide Ceo Salaries? ; the Shareholders, of Course. The Government Can Help by Enforcing Greater Disclosure On the Part of Companies and Higher Literacy Among Shareholders. It Must Not Dictate the Salary, Though.

Summary

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Until recently, Union Corporate Affairs Minister Salman Khurshid made no bones about the fact that he wanted to end the practice of listed companies seeking government approval for a director's pay. "Let the shareholders decide how much they want to pay someone, though there must be disclosure, to us, to the shareholder, to the public at large,'' he had said.

But, if his comments provided cheer to corporate India, then the minister's dramatic U-turn in the first week of October gave it a rude shock. Khurshid has now trained his guns on CEOs, dropping broad hints at tightening the law to rein in "vulgar salaries . Under the present Companies Act, 1956, the remuneration of full- time directors cannot exceed 10 per cent of the company's net profit as computed under Section 349 and 350 of the Act. One per cent of the net profit can be given away as commission to directors.

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Who Will Decide Ceo Salaries? ; the Shareholders, of Course. The Government Can Help by Enforcing Greater Disclosure On the Part of Companies and Higher Literacy Among Shareholders. It Must Not Dictate the Salary, Though.

The new Companies Bill, tabled in the Lok Sabha, however, seeks to do away with these caps on pay and allows even loss-making compa...

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