Sebi proposes consolidated pay disclosure for top AMC executives

In a consultation paper, Sebi proposed allowing mutual fund houses to disclose remuneration of senior executives on an aggregated basis rather than naming individual employees and detailing their compensation separately.

At present, AMCs are required to disclose remuneration details of employees falling under three categories: top management personnel such as the chief executive officer (CEO), chief investment officer (CIO), chief operating officer (COO) or their equivalents; the top 10 employees by remuneration during the disclosure period; and employees earning annual remuneration of at least ₹1.02 crore or monthly remuneration of ₹8.5 lakh and above.

Currently, these disclosures are made on an individual basis. Sebi has proposed that AMCs instead disclose the number of employees in each category along with their aggregate remuneration.

According to data analysed by the regulator, employees covered under the existing remuneration disclosure framework account for only a small proportion of the workforce in most AMCs, typically between 2% and 10% of total employees.

The regulator, with this proposal, seeks to provide investors with a structured view of senior management compensation while safeguarding the privacy of AMC employees.

The move follows industry feedback that granular disclosures could lead to misuse of personal information and place mutual fund houses at a competitive disadvantage compared with portfolio management services (PMS) and alternative investment funds (AIFs), which do not face similar disclosure requirements despite competing for the same talent pool.

Industry participants also told Sebi that several existing safeguards are already in place, including limits on recurring scheme expenses, oversight by trustees and independent directors, scrutiny by nomination and remuneration committees, audits, and alignment-of-interest requirements. They argued that individual remuneration disclosures offer limited additional value to investors.

Separately, Sebi proposed introducing a scheme-level disclosure of the total remuneration paid to fund managers. This information would be made available by AMCs on request to unitholders and would be restricted to schemes in which the investor holds units. 

The disclosure would include the number of fund managers overseeing a scheme and the aggregate remuneration paid to them.

Sebi noted that fund managers’ remuneration is currently disclosed only indirectly when they feature among the top 10 highest-paid employees or cross the prescribed income threshold. Given their central role in investment decision-making, the regulator said there is merit in providing investors with greater visibility into their compensation.

Sebi has sought comments from stakeholders on the proposals by June 30.