Will India go the Barack Obama way and cap executive salaries ? Our Prime Minister talked about this a few years ago, but the time for such an idea may have finally come.
In fact, Prime Minister Dr Manmohan Singh had appealed for it.
"We cannot afford the wasteful lifestyles of the Western world. CEOs should cut their salaries," said Dr Singh had said.
Now, the US President has enforced it.
"Top executives at firms receiving extraordinary help from US taxpayers will have their compensation capped at $500,000—a fraction of the salaries that have been reported recently,” said Obama said.
The salaries and bonuses in US have been astounding, beginning at tens of millions of dollars to one of the highest at 256 million dollars a year. India's promoters and CEOs are no different.
After adjusting the purchase power parity, Indian executives are among the highest paid in the world with the annual pay cheques for several CEOs running into crores. The two Ambani brothers walk away with a hefty Rs 30 crore to 40 crore a year and many others including Sunil Mittal and Naveen Jindal earn between Rs 13 crore to 14 crore just in salaries every year.
So should Indian CEOs also cap their salaries?
The extreme disparity between the rich and the poor may have prompted the PM to make the appeal two years back. But India's corporate czars ignored his call saying the government cannot regulate private sector salaries. Today things are different. The tough economic environment may force many of them to take a hard look at their pay packages.
But the big question is, will Washington's regulation over executive pay set a precedent for other countries and will Barack Obama's clampdown on Wall Street's pay be another wake up call for Indian CEOs?
CAclubindia
