More transparency on executive pay to boost investor confidence: Report

NEW DELHI: Greater transparency on executive remuneration would boost investor confidence and "granularity of disclosures" would compel managements to make more considered decisions on pay packets, says a report released today.

"Greater transparency on executive remuneration will promote investor confidence ... the granularity of disclosure will act as a self-regulatory tool, compelling managements and boards to make more considered decisions on executive compensation," the report by proxy advisory firm IiAS said.

Besides, the Institutional Investor Advisory Services (IiAS) said that corporates should cap compensations and also provide a "reasonable range within which the board can exercise its discretion".

Advocating the need for high component of "variably pay" in the overall salary mix, the report said that such a system would help in linking performance and pay.

"... the structure of such incentives must be aligned with those of comparable peers and capped at a reasonable level, which is commensurate with the size and financial health of the company," it noted.

The proxy advisory firm in a release said that "three resolutions relating to executive compensation presented by Tata Motors" were defeated.

"The outcome of these resolutions throws light on a related issue: disclosure levels regarding executive remuneration," the release noted.

Earlier it was disclosed that salary proposals for Tata Motors' executive directors -- Ravindra Pisharody and Satish Borwankar -- and Karl Slym (late managing director) have been rejected by the shareholders.

"These three resolutions on senior executive remuneration secured 70 per cent approval of voting shareholders, marginally below the approval threshold of 75 per cent. The company takes due note of the postal ballot results," a Tata Motors spokesperson said.