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Wide gap between staff, CEO remuneration: study

Mumbai, Nov. 14: India is witness to an increasing differential between an ordinary worker's wages and a chief executive. The differential has moved dramatically to touch 1:400 as against 1:20 two decades ago, a study conducted by the Centre for Corporate Governance indicated. According to the survey there is an urgent need to rein in excessive compensation.

Addressing a seminar on the "Challenges of Corporate Governance in turbulent times," Mr M. Damodaran, chairman of the Unit Trust of India and IDBI, and also chairman for Western Chapter of Centre of Corporate governance said, "Corporate Governance should not only be on paper, but should also be put into practice." "One of the ultimate negative points of corporate governance is the chief executive, often the promoter, of a company also heading the board of directors. A structural change should be there in the composition of the board of directors so that better corporate governance can be practised," Mr Damodaran said.

The regulators should not be too obsessed with quarterly results of corporates. It requires lengthy reviews and huge efforts, especially if the company is large and diversified, to put together a quarterly review of performances. Such mandatory requirements put enormous pressure on companies and could force people to put out information that may not be entirely accurate, Mr Damodaran added.

Dr Madhav Mehra, president, World Council for Corporate Governance also expressed his views in saying that CEOs have not been focusing on creating wealth but manipulating figures to justify large bonuses to enhance their pay packages and pointed out that the other reason for corporate collapse is the "mortal fear in which today's CEO lives off the stock market, which forces him to inflate quarterly earnings. We have to educate investors to ignore quarterly reports and take a long view
of the company's performance."

Reliance, NTPC, HPCL and Thomas Cook were the recipients of this year's Golden Peacock Awards. Reliance was awarded for excellence in social responsibility in the private sector.

Thomas Cook and HPCL received awards for excellence in corporate governance in private and public sector respectively.