What I find pernicious about Indian corporations is the atrocious salaries paid to managing directors and the poor salary paid to employees down the line. I worked in a company where the salary of the peon (the lowest employee) was less than one-thousandth of the managing director’s. The managing director comes in a BMW while the peon walks to the office. The managing director dines in fine dine restaurants with his family members while the peon eats a vada-pao costing Rs 5 from a kiosk by the road. What’s the problem? Both are employees of the same organisation, both are working hard. What makes the directors and CEOs pay themselves indecent salaries while the other employees suffer with no increment whatsoever.
In Switzerland Thomas Minder has been fighting for reforms including voting of directors’ remuneration by shareholders. Surely, shareholder are the real owners and they don’t want their dividends to be diluted by the luxurious living standards of the directors. That is the best way of keeping top-management salaries under control. Among the directors there is a tendency for accountants to pay themselves quite a lot of the loot rather than engineering or marketing.
This is a much needed reform that needs to be introduced in India too. Some avatar of Thomas Minder should raise the issue in parliament and steps should be initiated to curb the rampant misuse of funds by directors of companies. The need is very dire indeed in the face of liberalisation and relaxation in foreign direct investment (FDI) norms. So who’s going to bell the cat? Subramaniam Swamy perhaps?