Executive Pay Business Line
Mostly welcome | Business Line
The Hindu Business Line, August
Mostly welcome
The Hindu Business Line, August
28, 2014
Mostly welcome
This refers
to your editorial “Coal Truths” (August 27). While we welcome the decision of
the Supreme Court in deciding the coal block allocations as arbitrary and
illegal, we hope the Court will also make a distinction between mines that are
far from ready and those which are in production, and also between allotments
to public sector and private sector companies. Units which have started
production or which have made considerable progress for production should be
allowed to have the allocation, maybe with a revised price. There may not be
any harm in allowing the public sector entities to continue with the same terms
and conditions of allocation.
to your editorial “Coal Truths” (August 27). While we welcome the decision of
the Supreme Court in deciding the coal block allocations as arbitrary and
illegal, we hope the Court will also make a distinction between mines that are
far from ready and those which are in production, and also between allotments
to public sector and private sector companies. Units which have started
production or which have made considerable progress for production should be
allowed to have the allocation, maybe with a revised price. There may not be
any harm in allowing the public sector entities to continue with the same terms
and conditions of allocation.
S Kalyanasundaram
Chennai
Though the Supreme Court has categorised the coal blocks
allocation as illegal, it has not cancelled them altogether. This creates
uncertainty over whether these will ultimately be operated by Coal India Ltd
which has a monopoly in the sector. There is a huge dearth of coal in India for
power production. And captive coal production is only 50 per cent of the
target. So things are really bad in this sector.
allocation as illegal, it has not cancelled them altogether. This creates
uncertainty over whether these will ultimately be operated by Coal India Ltd
which has a monopoly in the sector. There is a huge dearth of coal in India for
power production. And captive coal production is only 50 per cent of the
target. So things are really bad in this sector.
The only good thing about the decision is that coal blocks
allocated for ultra mega power projects would only be used for that purpose,
what Reliance Power tried to do. The Court must provide complete clarity on
this issue because if at the end of the day it is to be operated by Coal India,
then reform and opening up of the sector becomes more crucial. Strategic
investors will be wary after that
allocated for ultra mega power projects would only be used for that purpose,
what Reliance Power tried to do. The Court must provide complete clarity on
this issue because if at the end of the day it is to be operated by Coal India,
then reform and opening up of the sector becomes more crucial. Strategic
investors will be wary after that
The only good thing about the decision is that
coal blocks allocated for ultra mega power projects would only be used for that
purpose, what Reliance Power tried to do. The Court must provide complete
clarity on this issue because if at the end of the day it is to be operated by
Coal India, then reform and opening up of the sector becomes more crucial.
Strategic investors will be wary after that decision whether to invest in this
sector or not. Retail stock investors would have lost a major chunk of their
portfolio after this decision.
coal blocks allocated for ultra mega power projects would only be used for that
purpose, what Reliance Power tried to do. The Court must provide complete
clarity on this issue because if at the end of the day it is to be operated by
Coal India, then reform and opening up of the sector becomes more crucial.
Strategic investors will be wary after that decision whether to invest in this
sector or not. Retail stock investors would have lost a major chunk of their
portfolio after this decision.
Bal Govind
Noida
What’s the logic?
It is heartening to note that the State Bank of India has
reduced interest rates on housing loans by 5 basis points to 15 basis points.
But what is the logic of reducing interest rate for loans got by women compared
to other borrowers. India is a patriarchal society. Some men might misuse the
provision and use their better-halves for getting loans at concessional rates
and later ditch the women. Also, the provision that the salaried class will pay
less interest than the self-employed is unfair. After all, all are not
successful in business.
reduced interest rates on housing loans by 5 basis points to 15 basis points.
But what is the logic of reducing interest rate for loans got by women compared
to other borrowers. India is a patriarchal society. Some men might misuse the
provision and use their better-halves for getting loans at concessional rates
and later ditch the women. Also, the provision that the salaried class will pay
less interest than the self-employed is unfair. After all, all are not
successful in business.
S Ramakrishnasayee
Ranipet, Tamil Nadu
Pay posers
“Who gets say on executive pay?” by Suveera Gill (August 27)
throws up pertinent posers. There is no gainsaying the fact that probing
queries are normally asked only by minority shareholders while the others
simply acquiesce with the motives of the directors. It is prudent and
scrupulous to make pay-structure and perks performance-linked. More than the
pay, job satisfaction and doing justice to one’s assigned role should drive the
top hierarchy of corporates. After all, how much money does one require to lead
a luxurious life? The principle of diminishing marginal utility still holds
good. Empowering minority shareholders will pave the way for improving
corporate governance. More emphasis should be given to what is being said than
who is saying it.
throws up pertinent posers. There is no gainsaying the fact that probing
queries are normally asked only by minority shareholders while the others
simply acquiesce with the motives of the directors. It is prudent and
scrupulous to make pay-structure and perks performance-linked. More than the
pay, job satisfaction and doing justice to one’s assigned role should drive the
top hierarchy of corporates. After all, how much money does one require to lead
a luxurious life? The principle of diminishing marginal utility still holds
good. Empowering minority shareholders will pave the way for improving
corporate governance. More emphasis should be given to what is being said than
who is saying it.
CG Kuriakose
Kothamangalam, Kerala
Crime and politics
The Supreme Court has done the right thing in refusing to
disqualify ministers facing criminal charges and leaving it to the wisdom of
the Prime Minister and the chief ministers to take a call on keeping them out
of the Cabinet. In doing so it has adhered to the ‘doctrine of separation of
powers’ enshrined in the Constitution and avoided the charge of ‘judicial
overreach’. The judiciary cannot take the edification of the political class on
itself as its primary task. At the same time, the apex court has made it clear
that the head of governments at the Centre and in the States should show
fidelity to the constitutional trust reposed in them while exercising their
prerogative to male any one of their choice a minister.
disqualify ministers facing criminal charges and leaving it to the wisdom of
the Prime Minister and the chief ministers to take a call on keeping them out
of the Cabinet. In doing so it has adhered to the ‘doctrine of separation of
powers’ enshrined in the Constitution and avoided the charge of ‘judicial
overreach’. The judiciary cannot take the edification of the political class on
itself as its primary task. At the same time, the apex court has made it clear
that the head of governments at the Centre and in the States should show
fidelity to the constitutional trust reposed in them while exercising their
prerogative to male any one of their choice a minister.
The onus is now on the Prime Minister and the chief ministers to
follow the court’s observation in its right spirit and drop the ministers with
criminal charges against them. It will go down very well with the people as a
decisive step towards de-criminalisation of politics.
follow the court’s observation in its right spirit and drop the ministers with
criminal charges against them. It will go down very well with the people as a
decisive step towards de-criminalisation of politics.
G David Milton
Maruthancode, Tamil Nadu
Root out
the ISIS
the ISIS
The US should also share the blame for the rise of ISIS in Iraq,
as it is responsible for destroying a stable nation under the late Saddam
Hussein, on the pretext of that nation having nuclear weapons. The US itself
later admitted that Iraq did not have nuclear weapons. The menace of ISIS,
which is also a threat to India, should be dealt with firmly. There are reports
that some misguided youths from India have joined the ranks of ISIS. Is the
superpower finding itself helpless before a few thousand terrorists?
as it is responsible for destroying a stable nation under the late Saddam
Hussein, on the pretext of that nation having nuclear weapons. The US itself
later admitted that Iraq did not have nuclear weapons. The menace of ISIS,
which is also a threat to India, should be dealt with firmly. There are reports
that some misguided youths from India have joined the ranks of ISIS. Is the
superpower finding itself helpless before a few thousand terrorists?
Deendayal M Lulla
Mumbai
Executive
pay
pay
This refers to the article “Who gets a say on executive pay?” by
Suveera Gill (August 27). This is a well researched, interesting article.A
mention of the need to bring some correlation between pay, perks and incentives
in the private sector and the comparable public sector organisations would have
helped initiate a more meaningful debate on the inconsistencies in the wage
structure across sectors and hierarchies. The cause for unethical practices can
be traced to the anomalous costs, prices, wages and income structure.
Suveera Gill (August 27). This is a well researched, interesting article.A
mention of the need to bring some correlation between pay, perks and incentives
in the private sector and the comparable public sector organisations would have
helped initiate a more meaningful debate on the inconsistencies in the wage
structure across sectors and hierarchies. The cause for unethical practices can
be traced to the anomalous costs, prices, wages and income structure.
When the first Indian President’s first month’s salary was fixed
at a consolidated amount of ₹10,000, the
underlying thought was, reportedly, a ratio of 1:10 between the lowest and
highest remuneration across sectors in the country. At that time, there
were not many executives in the private sector who drew a higher salary than
the President. The argument is not that such a ratio should remain static. But,
someone should look at the ethical inconsistency in a small Indian company
paying two of its ‘employees’ a remuneration of ₹50
crore or above, when hundreds of executives in public and private sector who do
much more work get paid much less than two per cent of ₹50 crore. Any degree of
patriotism will not stop ‘affected’ individuals from making comparisons.
at a consolidated amount of ₹10,000, the
underlying thought was, reportedly, a ratio of 1:10 between the lowest and
highest remuneration across sectors in the country. At that time, there
were not many executives in the private sector who drew a higher salary than
the President. The argument is not that such a ratio should remain static. But,
someone should look at the ethical inconsistency in a small Indian company
paying two of its ‘employees’ a remuneration of ₹50
crore or above, when hundreds of executives in public and private sector who do
much more work get paid much less than two per cent of ₹50 crore. Any degree of
patriotism will not stop ‘affected’ individuals from making comparisons.
MG Warrier
Mumbai
Shareholders have limited powers to curb this menace of high
executive compensation. The promoters, by being the majority stakeholders, have
their way when it comes to voting. If we tax incomes above a certain threshold
at very high rates it will in turn discourage top executives from taking
salaries above certain limits which will affect their post-tax income.promotors
will invest that money in their businesses which is actually good for jobs and
growth. High compensations are responsible for the volatility in the real
estate market and the stock markets. It is a proven fact in the western world
that the housing bubble and the stock market bubble and the subsequent crash of
2008 were caused by many moving parts, in which the CEO and top management
compensation played a role too. Let’s not go down in history as a nation with
among the highest inequality rates and a rising number of billionaires every
year.
executive compensation. The promoters, by being the majority stakeholders, have
their way when it comes to voting. If we tax incomes above a certain threshold
at very high rates it will in turn discourage top executives from taking
salaries above certain limits which will affect their post-tax income.promotors
will invest that money in their businesses which is actually good for jobs and
growth. High compensations are responsible for the volatility in the real
estate market and the stock markets. It is a proven fact in the western world
that the housing bubble and the stock market bubble and the subsequent crash of
2008 were caused by many moving parts, in which the CEO and top management
compensation played a role too. Let’s not go down in history as a nation with
among the highest inequality rates and a rising number of billionaires every
year.
CR Arun
Email
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