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| CEO pay: Khurshid leaves it to the board |
| Press Trust of India / New Delhi Nov 17, 2009, 18:08 IST |
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 Making it clear that it does not want to play the regulator by intervening in executive remuneration, the government today said the board is the appropriate body for it, but opined it needs to be ensured that such decisions are taken democratically.
"We do believe in essential freedoms in a democracy. The ultimate decision on managerial remuneration should rest with the shareholders and the board," Corporate Affairs Minister Salman Khurshid said, adding, "We need to ensure that there is shareholder democracy."
Under the present Companies Act, firms need government approval before raising salaries of directors beyond a threshold of 5 per cent of annual profit, and raising more than 11 per cent for total remunerations of managerial positions.
Managerial remunerations are "not a dogmatic or an ideological issue" and what salary who will take home, should ultimately rest with the shareholders, who in turn should have a fair say in the decision, said the minister.
The issue regarding CEO remuneration and annual spend on corporate social responsibility (CSR) will be debated by the Parliamentary Standing Committee, which is scrutinising the provisions of the new Companies Bill tabled in Lok Sabha in August.
"We need to go beyond affirmative action" and CSR efforts could be given a fillip through fiscal relief... These issues need to be debated threadbare for their possible incorporation in new Bill," Khurshid said.
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