Executive Compensation: The Winds of Change
Anubhav Gupta
Senior Consultant,
Aon Hewitt
Aditya Nanavaty
Senior Analyst,
McLagan, An Aon Company
Surbhi Jain
Consultant,
Aon Hewitt
The first serious attention paid to executive compensation in India was after the financial meltdown half a decade back. Financial services and specifically, the private and foreign banking sector that was at the forefront of impact was the first one to experience a plethora of checks and balances when the Reserve Bank of India (RBI) released guidelines on compensation of whole-time directors, Chief Executive Officers, risk takers and control function staff, etc. These guidelines were broadly based on Financial Stability Board (FSB) principles of sound compensation practices. Not only were the checks and balances to bebrought in place, a number of disclosures with respect to executive
compensation also went along with these guidelines. Executive compensation in India Inc. at a much broader level is facing something similar with the new Companies Act. Apart from regulations, there are factors like advent of new age organizations and rising expectations that are impacting executive pay. In this article, we have discussed some of these changes and how they are impacting the executive compensation landscape in India.
| Parity: Key Disclosures |
- The ratio of remuneration of each director to the median remuneration of the employees of the company for the financial year
- The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or manager, if any, in the financial year
- The percentage increase in the median remuneration of employees in the financial year
- Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration
- The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year
|
|