Now Reading: CEO pay cap proposed by SEBI panel faces boardroom test
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CEO pay cap proposed by SEBI panel faces boardroom test
SEBI's appointed committee has recommended a cap on CEO and managing director remuneration at 1% of a company's annual net profit, according to sources familiar with the proposal. The panel, led by…
SEBI's appointed committee has recommended a cap on CEO and managing director remuneration at 1% of a company's annual net profit, according to sources familiar with the proposal. The panel, led by former RBI deputy governor R Gandhi, submitted its report last week suggesting the ceiling be applied to all listed firms, with any excess requiring a separate shareholder vote of at least 75% approval.
The move comes after years of fast-rising executive pay at top Indian companies triggered investor concerns about linkage to performance. Industry bodies are expected to push back during the public consultation period that SEBI will open before finalising the rules. The regulator is likely to publish the draft amendments by March 2025.
Indian Opinion Analysis
The Personalised Performance Committee sets the compensation bar for India's top CEOs, and cuts to it rarely pass without boardroom friction. Under the 2021 SEBI Listing Obligations and Disclosure Requirements, a remuneration committee must include at least three independent directors and justify any payout above the median of the top 100 managerial salaries. The new cap will force companies either to shrink variable pay or redesign performance metrics, a choice that may reshape how executive bonuses are tied to shareholder returns. The 2025 annual general meeting season, beginning April, will be the first test of whether boards comply or seek exemptions.
Source: thenewsminute.com
This brief was synthesised by AI from the source linked above.
