It is a double whammy for Naveen Jindal.
One, the government capped the subsidised LPG cylinder sales at six per year as against his requirement of more than one a day; and now Stakeholders Empowerment Services (SES), a proxy advisory firm, has asked institutional shareholders of Jindal Steel and Power to not allow him to raise his own salary.
How do you think he can pay for the cooking gas he badly requires for whatever reasons?
A proposal to revise the salaries of whole-time directors of JSPL will be put before shareholders in the company's AGM on Wednesday, according to a report in the Economic Times. It is this plan that has come under attack from SES.
The advisory firm has circulated a note on the proposal in response to the media reports that Jindal was the highest paid executive-Rs 73-odd crore-in the country in 2011-12, the ET report said.
SES said Jindal got 92 percent of all the payments made to the entire board and his payment is around "25 times the pay of the next highest paid director, Vikrant Gujral", according to the ET report.
SES has said this is a corporate governance issue. The company's salary policy is not transparent, it has said.
The development is bringing back into focus the issue of CEO salaries in India. There are no laws in the country that links CEO salaries to his company's performance. The fact that most of the Indian companies are family-run and have promoters as CEOs adds to the opaqueness.
As pointed out by SES, there is an issue of conflict of interest if the board revises the remuneration of its whole-time directors. In JSPL's case, Jindal is also a whole-time director.
A suggestion towards scrutinising CEO salaries recently came from SEBI Chairman UK Sinha, when he said the market regulator may ask companies to set up remuneration committees headed by independent directors.
However, it remains to be seen how effective this move will be. JSPL has no such panel in place, according to the ET report.
Until SEBI comes out with a concrete plan, intervention of such activist advisory firms are likely to be the most effective.
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