Narayana Murthy says don’t pay CEO too much salary; wants balance of power between management, board
Infosys co-founder Narayana Murthy today pitched for a fair balance of power in companies, between the CEO and management, and the board of directors, to check scams and frauds, and to ensure that corporate resources are misused to gain personal riches. Narayana Murthy said that the managerial remuneration has to be a fair multiple of the compensation of the lowest level employee in the company. As an example, if the lowest paid employee’s remuneration was Rs 2-3 lakh a year, the CEO remuneration should be Rs 70-80 lakhs, Narayana Murthy added.
Balance of power
Expressing concerns about board governance in India, Narayana Murthy further said that paying large severance packages to buy the silence of outgoing executives must be prevented by the board. He said that in professionally managed companies, the management can push weak boards to extract unjustifiable compensation for themselves and use the company’s resources for personal benefits. Whereas the owner-managers can use listed companies to enrich their private companies, he said, speaking at the 47th National Management Convention (NMC) of All India Management Association (AIMA).