Dont Restrict Top Brass Salary: Ficci

An apex chamber has urged the Department of Company Affairs (DCA) to grant the management total freedom to fix the remuneration to be paid to its directors and managers.

"Any rigidity, or harsh stipulations, in fixing the remuneration, against the backdrop of the ongoing globalisation process in the Indian corporate sector, will be counterproductive," the Federation of Indian Chambers of Commerce and Industry (Ficci) said in a statement issued here yesterday..

The Companies Act 1956 stipulates that the remuneration to the directors and managers should not exceed 11 per cent of the net profit of the company for that financial year. "This provision is acting as a deterrant in retaining the right talent," the Ficci statement said. According to the chamber, the world over, remuneration of professionals works out to an average of 45 per cent or so of the profits.

 

Under the existing provisions, in cases where the remuneration exceeds the prescribed limit, the approval of the central government is required. "This is time-consuming and prohibits the corporates from taking timely action for enhancing the remuneration to the deserving people," the chamber said in the statement.