Pay cheques of CEOs, directors under Sebi scanner

“It may be noted that, on average, the remuneration paid to CEOs in certain Indian companies is far higher than the remuneration received by their foreign counterparts and there is no justification available to that effect,” a discussion paper released by Sebi on Friday, said.

The capital market watchdog believes the remuneration should reflect a “balance between fixed and incentive pay” and that regulatory disclosures should include the “ratio of the remuneration of each director to the median employee’s remuneration.”

Sebi intends to bring in these amendments in the listing agreement and has sought public feedback on the same. The regulator is looking at aligning the requirements of Clause 49 with those in the Companies Bill 2011 passed by the Lok Sabha in the winter session of Parliament.

Sebi also feels independent directors should not be entitled to any remuneration, other than sitting fees, reimbursement of expenses for participation in board meetings and profit-related commission as approved by the members. These are already part of the Companies Bill.

The regulator plans a complete overhaul of the corporate governance norms by putting in additional checks and balances for the selection and continuous evaluation of independent directors while giving additional powers to minority shareholders.

The discussion paper also questions the practice of giving preferential rights to private equity or any

... contd.