In a stringent set of executive pay disclosure norms, the government has proposed to make it mandatory for listed companies to give their rationale behind salaries and hikes given to top management personnel vis-a-vis the business performance. The companies have already been asked to provide a ratio of the top management remuneration and the median employee salary on an yearly basis under the new Companies Act. The stringent norms come amid instances of companies, even without adequate profits, doling out exorbitant salaries to their top executives.
According to the new rules, the ratio of remuneration of each director to the median compensation of the employees of the company for the financial year needs to be disclosed.
Read the Economic Times news report here.