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Raise non-wholetime directors' pay: CII

Our Bureau

NEW DELHI, July 20

THE Confederation of Indian Industry (CII) has urged the Government to enhance the managerial remuneration of non-wholetime directors.

In a statement, the chamber has said that with the ever-increasing responsibility on non-wholetime directors, the one per cent net profit allocated for them seems to be on the lower side.

The chamber has pointed out that with the Securities Exchange Board of India (SEBI) corporate governance code's requirement for listed companies to have independent directors on the Board, much more obligation has been imposed on the non-wholetime direct ors. Therefore, this new breed of professionals need to be adequately rewarded for the pain and the trouble they take.

CII has stated that adequate compensation is absolutely essential to motivate the independent directors and ensure their greater involvement in the company. As for companies making losses or inadequate profits, the chamber has suggested that first and fo remost it is necessary to define inadequate profits.

With the present cap on remuneration, it is practically impossible to attract the right talent required to turnaround loss-making companies, the chamber has said. Furthermore, it demanded withdrawal of the requirement of approval by Central Government i n case managerial remuneration being paid is in excess of the limits.

Alternatively, CII has suggested that the limits fixed under Schedule XIII be enhanced adequately so that the requirement of Central Government approval is not required.

The chamber has also pointed out that the present norms for managerial remuneration were not in tune with present day needs, where Indian companies are competing for a limited pool of managerial talent in a globalised economy.

``Adequate compensation is a key factor to harness the intellectual capital, especially for profit making companies with good track record,'' the chamber has said.

Besides, since all listed companies as per the SEBI guidelines are required to have a remuneration committee, they should be allowed to decide the managerial remuneration along with the shareholders.