Shareholders may get to decide corporate executive pay

Shareholders may be empowered to decide on remuneration of corporate sector executives according to a proposal before parliament. According to union corporate affairs minister Salman Khurshid the parliamentary standing committee is to take a final call on the proposal.

Khurshid said the proposal provides for shareholders to decide the pay but the manner in which this will be done is something the legislation will spell out. He added that this would entail greater disclosures and transparency on from the corporate sector. The minister was addressing the 37th national convention of company secretaries in Hyderabad on Thursday.

According to the minister, the Companies Bill 2009 did not include any proposal for cap on executive pay, whereas the existing law provides for an 11 per cent cap. ''Shareholders should be able to take the decision with freedom, rationality, information and there should be enough disclosures to enable them to take a free and transparent decision, '' Khurshid said.

The standing committee report would most likely be available by the budget session. Also the ministry is working on early warning systems to prevent Satyam-like scams and provide further protection to shareholder and company interest.

Khurshid said the ministry was trying to put in place a behavior pattern that would warn when things start going wrong in any sector. He added that while it was possible for a company to turn in exceptional performance, it still required a special look by the ministry.

Khurshid also indicated that the Serious Frauds Investigations Office (SFIO) probe into Satyam was nearing completion.