The Hindu : Business : CEOs' salary cannot be legislated: CII chief

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Saturday, May 26, 2007
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CEOs' salary cannot be legislated: CII chief

Special Correspondent

`Skills shortage in key areas at top levels is a serious problem'

— PHOTO: ANU PUSHKARNA

SOCIAL RESPONSIBILITY: Sunil Bharti Mittal (left), President, Confederation of Indian Industry, with Lt. Gen. S. S. Metha, Director General, CII, at a press conference in New Delhi on Friday.

NEW DELHI: The Confederation of Indian Industry's new chief, Sunil Mittal, on Friday expressed the view that CEOs' salaries could not be legislated and business profitability could not be limited.

"Shortage of skills in key areas at the top level is a serious and genuine problem specifically in the services industry, which is facing pressure of high salaries,'' Mr. Mittal said in his maiden press conference after taking over as the President of CII.

Response to PM

In a measured response to the observations made by Prime Minister Manmohan Singh, who favoured breaks on `cartelisation' and corporate `greed' and high salaries of the CEOs, Mr. Mittal, while saying that there should be a correlation between the size of a company and the salaries to their employees, asserted that salaries could not be legislated.

Even while hurriedly adding that the Prime Minister's views were not misplaced, Mr. Mittal pointed out that the cases of high salaries were few.

Prescribing a social charter for industry on Thursday while addressing the Annual General Meeting of CII, the Prime Minister had also suggested that industry should limit the pay of promoters and executives, reduce conspicuous spending and not profit at the cost of the common man.

"The Prime Minister's message is to be taken in the right spirit. His concern was in view of the wealth inequality in the country... in-your face spending hurts people. He meant ostentatious display of wealth should be avoided,'' he said. On the issue of excessive profitability, he said: "Sometimes prices do go up but it is not a permanent feature and ultimately free market forces will prevail. However, industry works for profit and makes investments accordingly.''

Impressing upon industry to realise its responsibility to the society, the CII chief said, "We will be responsible toward nation building.''

On the Prime Minister's directive to the CII to implement its affirmative action plan for SCs and STs in a time-bound manner, Mr. Mittal said: "We will meet the measurable targets... and keep the society informed from time to time.'' About the controversies over land acquisition for the SEZs and mega industrial projects, he agreed that the existing rehabilitation policies were not sufficient and the government needed to look at them in a more holistic manner. The CII would work with Centre and the states to ensure that the farmers' "pain is minimised,'' he assured.

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