Letters: CEO pay conundrum
The article "More transparency, more pay for CEOs" (November 12) confirms an Urdu saying that means: "the more you try to cure a disease, the more incurable it becomes". Stakes and temptations in determining top executive compensation are high - investors overlook even obscenely high packages for the top management as long as the returns are high. The tribe of consultants, unless consisting of objective professionals, serves as a handmaid to the beneficiaries.
In US, the Dodd-Frank legislation requires, in addition to the disclosure of the annual compensation of the CEO, organisations to disclose the ratio between the total annual compensation of their CEO and median of the same for all employees. The intent is to provide a periodic reminder to shareholders and others of the reasonableness of CEO compensation. The high percentage performance-based variable pay for such positions serves as some check, but there are many CEOs who draw their entire compensation as fixed pay.
In the Indian context, a CEO's salary vis-à-vis other employees is important. So the ratio between the highest-paid and lowest-paid group of employees could be a good guideline. A ceiling as a percentage of net profit together with zero salary in a loss-making year could be tried as well.
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number
In US, the Dodd-Frank legislation requires, in addition to the disclosure of the annual compensation of the CEO, organisations to disclose the ratio between the total annual compensation of their CEO and median of the same for all employees. The intent is to provide a periodic reminder to shareholders and others of the reasonableness of CEO compensation. The high percentage performance-based variable pay for such positions serves as some check, but there are many CEOs who draw their entire compensation as fixed pay.
In the Indian context, a CEO's salary vis-à-vis other employees is important. So the ratio between the highest-paid and lowest-paid group of employees could be a good guideline. A ceiling as a percentage of net profit together with zero salary in a loss-making year could be tried as well.
Y G Chouksey Pune
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number
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First Published: Nov 12 2014 | 9:02 PM IST