New Delhi: Making it clear that it does not
want to play the regulator by intervening in executive
remuneration, the government on Tuesday 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.
Bureau Report
First Published: Tuesday, November 17, 2009, 18:55