The pay packets of chief executives of insurance companies is probably going to need some explaining and are in for scrutiny under challenging market conditions.
The High Level Coordination Committee on Financial Markets (HLCCFM) at a recent meeting discussed the issue, and hints have been dropped on setting ceilings on the compensation for CEOs and making shareholders pay for the juicy toppings.
“It is possible that a limit will be imposed up to which the company will bear the cost but if the board feels that higher salary needs to be paid then they should get the shareholders approval in which case the extra amount will not be charged to the company but the shareholders will bear the cost,” said the chief executive of an insurance company on condition of anonymity.
At present the salary of an insurance company CEO is approved by the board after which it goes the industry regulator if the salary is considered ‘very high’.
But one insurance company head said it was only a formality. “The regulator always approves the salary proposed by the board,” he said.
The committee’s act is likely to bring more clarity on how to fix the salary and to bifurcate the share of the compensation to be borne by the company from that by the shareholders.
“Currently there is no clarity on the salary and every year an approval is required for the salary which takes time. Now we expect there to be a proper guideline on the salary of CEOs,” said an industry