Whenever the Government tries to limit executive pay, self appointed defenders of Indian corporates(academics/media/industry leaders) rally against the intrusion of government into the private matters of companies. What people often forget(while seeking Western type freedom to pay 'top management') is that
- The number of FMCs(Family Managed Companies) in India, is much more than abroad.
- The use of remuneration consultants etc to justify pay rarely happens in India
- While appointing family members to executive roles in companies, rarely is a pretense even made of 'merit based appointment'. Instead, succession plan reasons etc are given. Fine, owners have that right I guess. But why pay top dollar in those cases?
Take the example of Great Offshore. One of its promoter's relatives Ms Sukriti Kumar is a MBA In Entrepreneurial studies from some USA college, with some experience(manpower related is my guess given Hewitt Industries). Adequate details are not given about her experience in Bharati Shipyard, that qualifies her for this high pay of Rs 3 million/year. Given how companies would flaunt the credentials of their relatives, one must assume the worst. And I'm certain that for this compensation, attracting India's best college alumni would not be an issue, for a 'corporate planning role'. Read the resolution below, and notice how carefully they have designed the pay to avoid crossing the statutory ceiling. If the ceiling was even 2x of its current limit, I'm confident that the pay package would have been that. By not crossing this limit, were they afraid of seeking Govt approval? With such practices, Indian cos show a regrettable lack of adhering to corporate governance codes.
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