Corporate governance issues in executive compensation: the Indian experience (2008-2012)

Abstract

While the 2011 Occupy Wall Street movement had the larger agenda of protesting against the influence of corporations in policy making and governance, one of its focal points was the growing disparity in the distribution of wealth and income across the world. The spectacular collapse of giants in the world of banking and finance between 2007 and 2009 revived the focused attention on the unduly high executive compensation paid by these organisations. The central issue in the compensation debate is what ought to be and what are in practice the determinants of such compensation. This paper explores these issues in the Indian context with special reference to the role of corporate performance, corporate ownership, and corporate governance in optimising CEO compensation in keeping with the shareholders' interests. The study is based on published compensation data (both yearly absolutes and year-on-year changes) relating to the 5-year period 2007-2012 for the top 102 companies in the country.