In variance with the recommendations of the JJ Irani committee on company law, a whopping 67 per cent of respondents to an Assocham-Asian Centre for Corporate Governance survey feel there should be a ceiling on the average remuneration of independent directors.
The respondents said pay packets of independent directors should not be higher than Rs 12 lakh (Rs 1.2 million) per year. According to reports, the pay packets of independent directors, at present, range from Rs 8 lakh (Rs 800,000) to Rs 16 lakh (Rs 1.6 million), depending on the company.
The JJ Irani committee report, submitted last year, had recommended that there should be no cap on the remuneration of independent directors and that shareholders should be given full liberty to decide such remuneration.
The majority of director-level respondents, polled from over 500 private sector companies, however, felt that Rs 12 lakh was fair remuneration for independent directors.
While 8 per cent said the average remuneration should be Rs 8 lakh per annum, 13 per cent felt it should be Rs 6 lakh (Rs 600,000) per annum and 12 per cent said it should be Rs 10 lakh (Rs 1 million).
The poll's findings revealed that India Inc would need around 4,000 to 5,000 independent directors, implying that the industry needed to build a cadre of professionally qualified independent directors.
As high as 78 per cent of the respondents at the director level felt the post of the chairman should be separate from that of the managing director for effective functioning. While 12 per cent were against such separation, 10 per cent abstained from giving their opinion.
On the issue of inviting Indians abroad and foreign nationals to the boards of large companies, 95 per cent of the director's favoured their entry.
