CEO salaries cannot be legislated: Mittal

Striking a different chord from Prime Minister Manmohan Singh who prescribed a social charter for the industry yesterday, Sunil Mittal, the new president of the Confederation of Indian Industry (CII), today said CEO salaries cannot be legislated and business profitability cannot be limited.

"Shortage of skills in key areas at the top level is a serious and genuine problem, specifically in the services industry, which is facing pressure of high salaries," Mittal said in his maiden press conference as CII chief.

He, however, said that there should be a co-relation between the size of a company and the salaries to their employees. "But these things cannot be legislated," he said, adding that the Prime Minister's views were not misplaced but the cases of high salaries are few.

Singh had, yesterday, suggested that the industry should limit the pay of promoters and executives, reduce conspicuous spending and not profit at the cost of the common man.

Mittal said in his own Bharti group, five of the top 12 executives are expatriates and hiring them was cheaper as against their Indian counterparts. "The Prime Minister's message is to be taken in the right spirit. His concern was in view of the wealth inequality in the country. In-your face spending hurts people. He meant ostentatious display of wealth should be avoided," he said.

On the issue of excessive profitability, he said: "Sometimes, prices do go up but it is not a permanent feature. Ultimately, free market forces will prevail. However, the industry works for profit and make investments accordingly."

He asked the industry to realise its responsibility to the society. "We will be responsible toward nation building," Mittal said.