Sebi to bring in norms for disclosing CEO pay

With the new norms in place, Sebi hopes to improve the level of disclosures made by companies which in turn would help investors to make better informed decisions

GN Bureau | September 23, 2013



Providing the necessary fillip to corporate governance norms in the country, the Securities and Exchange Bureau of India (Sebi) is set to roll out a series of checks and balances to monitor the fat paychecks of CEOs of companies listed on the stock exchange. In addition, the markets watchdog has asked these companies to put in place a whistle-blower policy to protect employees reporting the malpractices being followed by top-level executives.

According to a report in ZeeBiz, the markets watchdog will make requisite changes in the Listing Agreement framework and other corporate governance norms that companies need to comply with, a senior official said.

Companies will be required to provide a ratio of top management salaries and the median staff salary to the regulator. Also, companies will have to explain the relationship between salaries of top executives and the companies’ performance to their shareholders.

The other measures to be incorporated include greater powers to minority shareholders, succession planning in an orderly manner and hefty penalties for non-compliance with norms.

Earlier this year, the regulator had released a discussion paper on improving corporate governance standards and had sought comments from the public. In addition, the recently passed Companies Act has also introduced various steps to enhance corporate governance practices.

The guidelines come in the wake of numerous top-level executives continuing to earn hefty salaries, despite their companies reporting poor financial performance. With these norms in place, the regulator hopes to improve the level of disclosures made by companies which in turn would help investors to make better informed decisions.
 

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