Leave pay packets to us, industry tells government
06 October 2009
A day after both corporate affairs minister Salman Khursheed and Planning Commission deputy chairman Montek Singh Ahluwalia called for a trimming of salaries paid to top executives of private companies, the consensus in the industry seems to be that such decisions are best left to shareholders. (See: Khursheed bashes 'vulgar' corporate salaries).
FICCI president Harsh Pati Singhania was the most vehement in his comments, "Any new norms on compensation to Indian CEOs may set in motion a flight of talent and capital away from the country," he said.
Singhania added that lack of adequate compensation had seen a "brain drain" from India 15-20 years back, as the best and brightest got opportunities to earn many times more in foreign countries, particularly the West. "Talent has to be compensated," he said.
The Confederation of Indian Industry (CII) said it was working on a governance code for its members that would deal with remuneration of executives at board level and one level below.
A CII task force under the chairmanship of former cabinet secretary Naresh Chandra was studying the key issues of corporate governance, including the compensation packages of senior management, its president Venu Srinivasan said. "CII has always believed that corporates have a social responsibility and always supported self regulation," he added.
Another industry chamber, Assocham, said while it favoured adoption of austerity measures by the corporate sector, it was also imperative to keep in mind "market forces" to determine salaries of business honchos.