28 August 2011

MCA puts cap on salaries of CEOs

MCA puts cap on salaries of CEOs
New Delhi
August 26, 2011
The corporate affairs ministry has set a ceiling on the total remuneration to be paid to CEOs in the country. The total managerial remuneration to be paid to a board-level CEO of a company that has only one whole-time director would be capped at 5% of the total net profit of the company, minister of state for corporate affairs RPN Singh said in a written reply in Parliament on Thursday.
Singh also said for those firms that have more than one whole-time director, the total remuneration of its entire board of directors should not exceed 10% of the net profit. However, he said that if a company chooses to pay more it would require the ministry's approval.
The development is significant since corporate houses would now be required to seek MCA approval if they choose to shell out over 5% of the net profit for remunerating their CEOs or 10% of the net profit for remunerating the entire board of directors.
[Source: The Financial Express]

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