CEO salary in shareholders' hands: Khurshid

MUMBAI: Barely a week after he suggested that the salaries of company CEOs and executives be guided by a sense of austerity, corporate affairs minister Salman Khurshid on Friday said the company shareholders were the best judges to determine the pay.

���We should talk about this as part of corporate governance. But the bottom line according to the government is what the shareholders determine. If a company has its shareholders with it, who is the government to interfere,��� Mr Khurshid said at a press conference here. But the Congress minister justified what he termed as the ���sentiment��� behind his suggestion.

���The government is only interested in a free and fair debate on this issue. Let���s talk about it in the right spirit and by appreciating the sentiment behind this suggestion,��� Mr Khurshid said.

The minister appreciated Reliance Industries chairman Mukesh Ambani���s statement that he takes less than 1% of RIL���s net profits as his salary. ���If a corporate of the stature of Mr Ambani makes this gesture, there must be some merit in this suggestion. Also, he is taking less than 1% of the net profits when the government cap allows for 11%,��� Mr Khurshid said.

Under the Companies Act, 1956, the maximum remuneration which can be paid to all the directors of the company is 11% of the net profits of the company. Mr Khurshid said if the RIL chairman had made this gesture , a healthy debate over the issue was eminently desirable. But he added that the government did not want to be in the business of determining the remuneration to CEOs and executives.

���The government would like to leave to the wisdom of the shareholders. If the shareholders, in their wisdom, think that a certain level of remuneration is in the interest of the company���s growth, why would the government interfere,��� he said.

The minister also appreciated the need for higher salaries if a company wanted to hire the best talent available in the industry for its growth plans. ���If a company can afford it and has growth plans linked to hiring executives who it feels merit higher salaries, it is perfectly justifiable,��� he said.