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Ahluwalia has his take on high executive salaries


New Delhi : Joining the debate with Prime Minister Manmohan Singh on high corporate salaries, Planning Commission Deputy Chairman Montek Singh Ahluwalia says shareholders must question the emoluments of their company chief executives.

He also sharply criticises the promoters of family-owned firms who pay massive salaries to themselves and says the prime minister's speech May 24 at the annual meeting of the Confederation of Indian Indian Industry (CII) was misunderstood.

"In a world of transparency, it would be very reasonable for the shareholders of these companies to ask the question: If top 20 chief executives of the country are earning this salary, will you please tell why you deserve more?" he queries.

"Find out the salaries of top CEOs and then consider how many companies that are performing nowhere near as well are paying CEOs three-four times that salary," Ahluwalia tells Karan Thapar's "Devil's Advocate" programme for CNN-IBN.

"If you have a family controlled business and they owe themselves large salaries it is not necessarily the best thing to do," he maintains, and adds this becomes a matter of further concern when a company's profit shrinks.

Ahluwalia is uncertain if the new company law would lift the caps imposed on director-level salaries. It was earlier believed that this would happen but not after the prime minister's speech at the meeting of the industry lobby.

Manmohan Singh had said that India Inc must resist excessive remuneration to promoters and senior executives and discourage conspicuous consumption. "Profit maximisation should be within the bounds of decency and greed," he said.