Babus should decide CEO compensation

Prime Minister Manmohan Singh called on Indian Industry to resist paying large salaries to CEOs and cautioned that not doing this could lead to social unrest. This was met with expect resistence from the industry. Sunil Mittal argued that legislation in capping corporate salaries was not appropriate, and that a shortage of skills was leading to the inflated pay checks.

If you ask me (and I know you will), this is a specious argument. Look at the amount of talent in Indian government services. The efficiency of Indian babudom proves that having a salary cap works. I see no reason why it wouldn't work in the private sector too.

Others argue that these salaries are justified and that the wealth of investors in these companies have increased at a greater rate than the increase in salaries. This too is disingenuous as shown in this article that points out how salaries of some CEOs have increased even as their companies' profits decreased. This shows that the separation between performance and compensation is not unique to babudom. Montek Singh Ahluwalia explained that the Prime Minister was not arguing for new legislation but was merely appealing to Indian industry's conscience, the existence of which is almost as certain as the efficiency of Indian bureaucracy and the integrity of our politicians.

Sucheta Dalal eloquently argues: "Nobody wants to go back to the bad old days when some bureaucrat in Delhi decided what managing directors would earn ...". Bad old days? No, no, those were the good days. Please write to the PMO and appeal for a return to the glory days. Also please forward this appeal to at least 5 of your friends in the next five minutes. Failure to do so will result in your tax returns being scrutinized with a fine comb, or your passport application mysteriously disappearing, or some other such "bad luck"... you know the drill.