Apropos the report "New Companies Act eases concerns over high managerial pay" (April 23), the constitution of the Nomination and Remuneration Committee is no guarantee that companies will adopt a professional approach towards managerial remuneration. Most companies have a set of performance benchmarks that are tricky and, quite often, suit only a particular category of managerial personnel. Even when it comes to performance-related bonuses, companies are known to favour top management and ignore the interests of middle management.
Further, the application of the five per cent ceiling to all categories of companies uniformly is ill advised. How can the provisions equate companies that have restructured their debt with other good companies with regard to the cap on managerial remuneration? The additional disclosures that are required to be made by the board during financial crises go unnoticed and do not influence the company's remuneration policy. In brief, the managerial remuneration provisions in the amended Companies Act do not render justice to minority shareholders and indirectly favour the management.
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Further, the application of the five per cent ceiling to all categories of companies uniformly is ill advised. How can the provisions equate companies that have restructured their debt with other good companies with regard to the cap on managerial remuneration? The additional disclosures that are required to be made by the board during financial crises go unnoticed and do not influence the company's remuneration policy. In brief, the managerial remuneration provisions in the amended Companies Act do not render justice to minority shareholders and indirectly favour the management.
K V Rao Bangalore
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number