The Hindu : `Accountability should decide CEOs salary'

Online edition of India's National Newspaper
Wednesday, Sep 24, 2003

Business

Business

`Accountability should decide CEOs salary'

By Our Special Correspondent

NEW DELHI SEPT. 23 . Touching upon a rather debatable issue of salaries of the top functionaries in the corporate sector, the Infosys Chairman, N. R. Narayana Murthy, today said fairness, transparency and accountability should determine the "compensation'' of chief executive officers (CEOs) with a variable component to alter it according to the fortunes of the company.

While the compensation to be paid to a CEO is an issue to be decided by the board and shareholders, the three factors that needed to be taken into account are fairness, transparency and accountability, he said while addressing the CII Leadership Summit here.

Noting that fairness was subjective, where the company and the board had to decide what was fair salary, he said full details must be provided to the shareholders and they should approve it.

"As long as you make part of the salary variable so that when the company does well, the CEO also gets a good salary and when the company does not do well, the CEO does not get good salary, there is no problem,'' Mr. Murthy said what hurts most is when employees are fired and CEOs continue to get good salary even when company had not done well.

He said the current time was the opportune time to raise India to the ranks of developed nations and for this strong leadership was the need of the hour. Benchmarking on a global scale was the only way to competing globally and achieving excellence in all dimensions.

"To do so, Indian companies need to have an export orientation. Recent experience in pharma, manufacturing and IT industries stand testimony to it,'' he said, adding Infosys had benchmarked with Motorola for quality and Microsoft for their focus on EPS (earnings per share).

Mr. Murthy said with falling trade barriers, consumers had access to the best quality products and services from anywhere in the world; and to compete, Indian industry had to create powerful international brands.

Leaders of the corporate world had to create a vision of growth and value systems. "We need business leaders who will walk the talk in demonstrating their commitment to a value system,'' Mr. Murthy said.

According to him, this is the time to grow. "Today Indian software and services exports captured a 15 per cent market share worldwide and strong growth are coming from biotech, IT enabled services, telecom and automobile sectors and it is the time to take India into developed (countries') rank.''

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