It is bunkum. The government has every right to manage executive salaries of companies or business organisations which owe their existence and prosperity to various physical and fiscal incentives - from low-cost land allocation to soft loans, various concessional tariffs, credit guarantees and financial rescue packages - at the cost of the exchequer. Industrial promotion is not the function of some private promoters alone. It is a major function of any government to ensure economic development and greater social justice.

Unfortunately, the present economic reform allowing non-government companies unlimited freedom to fix salaries of their directors has been so generously exploited by the corporate sector that it has created a big divide between the rich and the poor - the high salaried and low wage earners — in the country and great social injustice and tension. The so-called shareholders' right is grossly misinterpreted and misused by corporate promoters and the management. The latter control companies, directly or indirectly, and not their ordinary shareholders. When did you last hear about shareholders of a company cutting down their directors' remuneration at an annual general meeting or extra-ordinary general meeting? Ordinary shareholders have always been at the mercy of corporate promoters and managers and not vice versa. Even institutional shareholders rarely complain about high managerial remuneration in companies, which may have already turned sick or are in the process of becoming sick.

In fact, it is high time that the government reined in managerial remuneration by at least linking it with a company's turnover, profitability, capital employed and its directors' innovative skills. It should also be linked with the average income of non-managerial employees. The government may also impose a special rate of income tax for those flaunting 'vulgar' salaries, other income and wealth. Those business leaders questioning the government's wisdom on managerial remuneration today may have forgotten the restrictions in this regard which existed through the 1980s. The cap on managerial remuneration was only Rs. 11,000 per month, which included Rs. 5,000 in cash and the rest in perks, then. Although no one, not certainly Khursheed, is remotely suggesting that the country should revert to that regime to address the issue of growing social and financial inequality, it should be noted that low managerial remuneration did not dampen the spirit of enterprise and excellence among Indians through those hard times. Nearly 90 per cent of India's large public companies and best enterprises, including Tata Steel, Reliance Industries, L&T, HDFC, Ranbaxy, Mahindras, Bajaj Auto, Godrej, Grasim, SBI, Jindal Steel, Infosys, HCL Technologies, ACC and Hindalco, managed to prosper through this era of excessive managerial remuneration control.

Lower managerial remuneration in public sector enterprises, then and now, did not prevent companies such as ONGC, SAIL, BHEL, NTPC, NALCO and NMDC from becoming global players. The CEO of BHEL, India's biggest technology company, gets a fraction of the annual remuneration of, say, even a tiny private sector entertainment company. The directors of such PSUs are not grumbling although they would have been very happy if they had bigger pay packets in keeping with the trend in comparable businesses in the private sector. In the case of PSUs, the government, their principal shareholders, grades its companies on the basis of certain criteria such as their turnovers, capital employed, performance and profitability and fixes pay and perks of the directors accordingly. No question is asked. No director or CEO grumbles about it publicly. And, yet they are among the best performers and prove to be a highly committed lot. Behind the success of many private sector enterprises, including RIL, JSW, Jindal Steel, ADAG, Sterlite, Essar and Ispat group, are retired and reemployed PSU directors.

According to an unofficial estimate, the number of corporate executives, who may qualify for listing under the 'vulgar' salary bracket of, say, between Rs. 5 crore and 40 crore per annum, is 3,000. Their combined salaries could add up to around Rs. 20,000 crore. However, this is not to be mixed up with the number of declared or undeclared crorepatis in the country, whose number will run into millions. They come from all walks of life - farmers and businessmen to high-profile deal fixers. Incidentally, two of the top so-called 'vulgar' salaried persons come from a political family of Tamil Nadu. They are: Kalanithi Maran and Kaveri Kalanithi, chairman-cum-managing director and joint managing director respectively of Sun TV. Each collected Rs. 37.08 crore as annual remuneration package, according to the latest published data.

Ironically, Salman Khursheed's outburst on 'vulgar' corporate salary came a day before the publication of the United Nations Development Programme's (UNDP) human development index in which India slipped several rungs from the previous level of 128 to 134, well behind even neighbouring Sri Lanka (102) and Bhutan (132). The index is a measure of the quality of life experienced by the people of a country in terms of poverty levels, literacy, health, child mortality and gender related issues. There is nothing to be proud of India's burgeoning nouveau riche, who are outnumbered by millions of poor, making less than Rs. 50 each per day. Khursheed, a gentleman politician, is within his rights to express concern about 'vulgar' salaries of the growing number of corporate biggies. However, given the general mood in the government and its economic policies, his concern may find few takers in the council of UPA ministers and its advisors. (IPA Service)