Oct 5, 2009

No vulgarity in salaries please!

The government after its austerity drive - now seems to be picking on corporate India to catch the fever and start cutting salaries.

By calling CEO salaries vulgar the Corporate Affairs minister is caught up in the wrong battle.

Corporate Affairs Minister Salman Khurshid on Sunday (October 4) said the government will keep a tab on what kind of salaries the country's CEOs will be paid adding that nobody in politics or outside, has reached a level of liberalism where vulgarity is also a fundamental right.

The issue regarding remuneration of company CEOs is to be debated by the Parliamentary Standing Committee, which is scrutinising the provisions of the new Companies Bill tabled in the Lok Sabha in August.

Just to put it in perspective the annual remuneration of some CEOs work out to be 50 crore rupees, which is 12,500 times the per capita income in India.

What Mr Khurshid seems to forget is that in the corporate world even if promoter CEOs pay themselves "vulgar" salaries, wagging a disapproving finger at them is not the answer - introducing measures to safeguard the shareholders and encouraging good corporate governance is the way to go forward.

Something that politicians and bureaucrats seem not to remember when they run things like national carriers to the ground!