Disclose CEO pay in perspective of staff salaries: Govt to cos

Amid a growing perception about India Inc doling out huge pay packages to the top management, the government wants the companies to disclose the remuneration paid to promoters and CEOs in perspective of their median staff salary.

"Publicly, there is so much debate about the companies spending large amounts of money towards remuneration for their top management personnel.

"It may be their hard-earned money. But the perception about the rich and the poor divide is getting bigger and bigger. That perception correction has to take place," Corporate Affairs Minister Sachin Pilot told PTI in an interview in New Delhi.

The Minister further said that there are multiple number of cases that he knew of "where perhaps people feel that the (general) employees are not getting enough money."

To correct this perception, Pilot said, the companies "must report salaries that promoters and chiefs get, plus the median salary of their employees" at the end of the year.

The regulations put a cap on remuneration of top management, as per which not more than 5 per cent of the net profit can be given to one single director of a company.

"While we have maintained this cap, changes are being made in the disclosures to be made at the end of the year," he added.

"The message

that we want to give to the corporates is that please disclose the median salary of employees so that we get an idea about the framework of the payments that are being made by the companies," Pilot said.

Asked whether the Ministry would consider tougher measures for the companies doling out huge salaries to their top management, the minister said that he was in favour of a disclosure-based regime, so that the investors can take informed decisions in this regard.

"What we want to tell the companies is that disclose the salaries for top management, but you also disclose how much you pay to your employees.

"I think the government must keep hands off approach. Our idea is to create a regulatory framework, give them (investors) all the inputs they need without creating a fear psychosis," he said.

"We have to play the role of an enabler. The Ministry of Corporate Affairs should be an enabling ministry and we should not be there to make it more difficult, as it is already difficult for investors as our ranking (in ease of doing business) is very low.

"We want to make it better, easier, competitive. Not just for me or the company but for the millions who get jobs and opportunities. If companies are not opened, how can we create jobs? Government cannot create that many jobs and most jobs come from the private sector. We can't ignore that fact," he said.