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Accountability, fairness should decide CEOs` compensation: Murthy
New Delhi, Sept 23: Infosys chairman N R Narayana Murthy today said fairness, transparency and accountability should decide the `compensation` of chief executive officers with a variable component to alter it according to the fortunes of the company.
New Delhi, Sept 23: Infosys chairman N R Narayana Murthy today said fairness, transparency and accountability should decide the "compensation" of chief executive officers with a variable component to alter it according to the fortunes of the company.
"CEO compensation is an issue that has to be decided by
the board and shareholders. Three factors are to be considered
for this -- fairness, transparency and accountability", he
said at the CII leadership summit here.
Fairness was subjective, where the company and the board had to decide what was fair salary and full details must be provided to the shareholders and they should approve, he said. "As long as you make part of the salary variable so that when the company does well, the CEO also gets a good salary and when the company does not do well, the CEO does not get good salary, there is no problem," Murthy said.
"We have seen particularly in the west when the companies did not do well, when they had to fire thousands of employees at lower levels, the CEOs continued to get very good salary. That hurts people." Once fairness, transparency and accountability were looked at, it was a decision of the company by the board and approved by the shareholders for the CEOs' compensations.
He said the current time was the opportune time to raise India to the ranks of developed nations and for this strong leadership was the need of the hour.
Bureau Report
Fairness was subjective, where the company and the board had to decide what was fair salary and full details must be provided to the shareholders and they should approve, he said. "As long as you make part of the salary variable so that when the company does well, the CEO also gets a good salary and when the company does not do well, the CEO does not get good salary, there is no problem," Murthy said.
"We have seen particularly in the west when the companies did not do well, when they had to fire thousands of employees at lower levels, the CEOs continued to get very good salary. That hurts people." Once fairness, transparency and accountability were looked at, it was a decision of the company by the board and approved by the shareholders for the CEOs' compensations.
He said the current time was the opportune time to raise India to the ranks of developed nations and for this strong leadership was the need of the hour.
Bureau Report