[Jeroen]

Originally Posted by Hayek

Have to disagree on some views and correct you on some points. One thing all of us forget is how incredibly poor India is - that is not because of those whom we consider poor (like our drivers or cooks or factory workers), but because of the massive wastage of talent in our agricultural sector. India has a per capita income of ~ USD 2000 and a labor participation rate of ~ 50%. So the average salary of an employed Indian is ~ USD 4000 or ₹ 2.6 lakhs per annum. This includes all the billionaires we have - and so the median salary of an employed Indian is probably much lower (my guess is half of that or ₹ 1.3 lakhs per annum or ₹ 11 k per month).

You are comparing to the USA. I have lived and worked in the USA for several years and although we thoroughly enjoyed ourselves, I have to admit that society at large really sucks as far as I am concerned. Inequality in every imaginable way is present, so salaries subsequently are also all over the place.

Let me put some of the figures/ratio’s into Dutch context. Which by and large will apply to countries, such as Germany, Switzerland, Belgium, Sweden, Denmark, Norway.

The minimum wage in the Netherlands is just under Euro 20.000 a year. If you earn more than Euro 100.000 a year you find yourself at the top 1% earners. To put it differently, for 99% of the working population the difference between the highest and the lowest salary is only a factor 5! That is gross, the nett difference is even less due to taxation and other financial incentives and support available to low income brackets.

To your point average salaries might not be the best measure when the deviation from the average becomes too large.

Originally Posted by Hayek

On your other point on wage income vs. entrepreneurial returns, I strongly disagree (but that may be my bias as a highly paid wage earner in the Indian context). The fact is that good CEOs make an enormous difference to organisations. Just compare returns of different companies in the same sector and that becomes obvious. A case in point is TCS vs Infy. Compare the performance of the two from the time when Chandra became CEO and you would find that TCS almost doubled in relative value during his term. So Chandra and his team created about USD 40 bn of incremental value for TCS shareholders vs a rival, well regarded management team. He has been rewarded for that with the Group Chairman Post - but as a shareholder, I wouldn’t have grudged him a pay packet of even USD 200 million for creating so much incremental value. Similarly, Steve Jobs came back to Apple as a paid employee (not as the original entrepreneur) and put it on a trajectory from near bankruptcy to a USD 1 trillion market cap.
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Everybody has conscious and unconscious bias. It is how we were put together.
For the last fifteen years I have had several different senior executives roles in three different continent. I served on several boards. And if you want to believe the Internet you can still find my name listed as CEO during my stint in the USA. And yes, I am well within that 1% bracket I mentioned earlier. Probably the 0,15% or so. Still I stand by my views on limiting base salaries for CEO. Let me explain:

Your examples are good one, in terms of CEO who for considerable times have lead their companies consistently and performed really well. But for every successful CEO I can name five that were not successful. In fact, many studies suggest that theres is simple no good correlation to be found between CEO pay and company performance. For the odd research paper that does I can provide dozens that show there isn’t such a correlation.

By the way when Jobs came back to Apple from 1997 to 2011 his base annual salary was $ 1. (That is one doller per year!) As you can imagine I approve of that

Your arguments for paying CEO huge amounts of money seems primarily related to how much money they make for the company. Well guess what, that is just part of the job description. Nothing special if he/she does that perse.

But I do have a fundamental different view on these top salaries. It stems from taking a dim view on huge salary disparities in a society. Back to my example. The difference between minimum wage in the Netherlands and my suggest max annual CEO salary is a factor of 50. Whereas for 99% of the population it is a factor 5.

For me that is already more than sufficient. I just don’t feel it is appropriate to increase that. The million admittedly is somewhat arbitrarily, but it is just a number and ratio’s I came up with. I have a bias towards what I like to think is fair and justifiable for everybody in society.


Jeroen

[torquecurve]

I will weigh in on this based on my personal experiences both as a 'worker' and now as a high level person in a small setup.

While it is easy to diss the salaries pairs to top level management and compare them to the low paid entry level roles the reasons for the same are something just not limited to economics. Of course the CEO can make or break the company by making one or multiple wrong decisions and a worker making a mistake will just be that one mistake affecting a limited circle. But let's dive deeper

Why contract workers - a lot of us don't know how entire industries have been stymied and shut down because of trade unions and the misplaced egos and political ambitions of a few. Just an example would be the thriving cotton and other mills in cities like Solapur (once boasting of the largest mills in Asia) which have now literally become defunct cities due to closure of these mills. Mumbai (Bombay) was home to some of the largest mills supporting a lot of families in the past. These mills are now just lands redeveloped by their owners who faced the union battles of the past. The point I am trying to make here is that this Unionism and wrong use of the same led to our business moving elsewhere - the market cannot wait for products. The reason why Maruti was able to survive an extended shutdown was because the market was willing to wait - if the same thing happened at Honda or Nissan the company would have been in the doldrums by now in India.

Government intervention to help the industry or people can be a two edged sword. Just go back and see how an entire Aerospace and Automobile industry was affected in the UK.

While on a micro level increasing the salary of a line worker will only affect the car pricing by 1-2% the same person buying the car who is also a share holder someway (directly or mutual funds or investments driven) will expect higher returns which will lead to cost cutting - and as the cost of Steel, oil or commodities is not in a company's control the easiest way is to replace or reduce employee cost.

[AMG Power]

Who decides whether a CEO is paid more than he is worth? Who decides whether a employee is paid more than he is worth? Who decides whether a worker's pay is higher or lower than his worth? Sure, everyone is entitled to an opinion but it is the opinion of the guy who puts his money where his mouth is that really matters.

There are scores of regular employees who get increments not because they are competent or worthy of it but because they curry favour with their boss. This would be far more easier to exist and cover up as it is happening at middle management levels. And yes, this may be happening at the CEO levels too.

Just as this is not a perfect world for employees and worker remuneration it is not a perfect world even for CEO remuneration. There are bad eggs everywhere (some may actually like some employees being bad) but to dismiss every single company and CEO remuneration being manipulated borders on idiocy.

In fact it may be far more easier for middle and lower level employees to get paid higher salaries by currying favour with their bosses than it is for a CEO whose salary is open for discussion and analysis by a lot of people including the press. Let's not think that the bright souls who can ferret out manipulation of CEO salary exist only on discussion forums. There are far more sharper minds who run companies successfully.

We recently had a case of a CEO and Executive Board of an Indian IT major playing "you scratch my back and I'll scratch yours" that didn't last long.

Any company that is managed properly will fix a CEO salary with the major portion based on performance and a minor fixed component and a CEO worth his salt will see that as an opportunity for higher earnings.

Here are some cases where workers have been exploiting thousands of crores from companies:

Quoting from Facebook:

Trade union leaders with the support of the 2 main political formations in Kerala wants to spend thousands of crores of public money to revive FACT an ailing, polluting chemical manufacturing unit located near a bustling metropolis to save the jobs around 2000 2500 highly paid, low skilled, highly unionized employees. In this connection we should note a few facts.

Fact is sitting on around 3000 Ares of prime property in a city where shortage of land is scuttling many popular projects which touches the life of the lakhs of citizens living in this city.

Fact is a highly polluting industry which is partly responsible for the present state of affairs of the Periyar river. It is also contributing to the low quality of air near the vicinity of their 2 plants at Udyogamandal and Ambalamughal, which are thickly populated residential localities.

Company has already eaten away crores and crores of tax payers money without any countervailing benefits to the society.

The politicians from the Left as well as the right are succumbing to the pressure exerted by the FACT employees whose average cost to company is more than Rs.70000.00 per month, who are highly unionised and capable of exerting such kind of pressure.

Now take the case of employees in the unorganised sector such as shop employees, construction workers, auto rickshaw drivers, and such other sundry workers. These people's monthly income is in almost all the cases is less than Rs10000.00 to Rs15000.00. Their numbers runs into millions. Since they are not a pressure group like the other organised sector employees, they are treated as second class citizens. Now in the present situation of kerala there is not much difference in the skill set of these unorganised sector employees and most of Government/Organised sector employees.

A sort of case study where wages are higher than the industry average yet doesn't lead to better relations are the states of Kerala and West Bengal.

The Taj Group of hotels pay the highest wages among all its hotels in India to its workers in Kerala as a result of which a waiter there gets around 50k per month. This is a lot more than what the waiters at their flagship hotel Taj at Mumbai are paid. Or for that matter what a lot of software engineers are paid. This is not because these waiters are far more productive than the ones at Mumbai but just that they are far more unionised.

Do the higher wages lead to better relations? Far from it, in fact the employee management relations are at the lowest level.

Plantation, Coir, Food are industries where workers in Kerala have negotiated higher wages than their counterparts in Tamilnadu and Karnataka. The higher wages have not resulted in better relations at all. In fact employee - management relations are probably amongst the worst. Many Coir and Food industrialists have, on account of unsustainable wage hikes demanded by unions, either moved their entire operations out of Kerala into Tamilnadu or have shut down.

So much for high wages bringing in good employee - management relations.

And before we start getting judgemental on CEO salary, it's probably a good idea to also assess the real reasons behind being "excited" because someone else is being paid a high salary.

[ashokrajagopal]

Originally Posted by torquecurve

Government intervention to help the industry or people can be a two edged sword. Just go back and see how an entire Aerospace and Automobile industry was affected in the UK.

While on a micro level increasing the salary of a line worker will only affect the car pricing by 1-2% the same person buying the car who is also a share holder someway (directly or mutual funds or investments driven) will expect higher returns which will lead to cost cutting - and as the cost of Steel, oil or commodities is not in a company's control the easiest way is to replace or reduce employee cost.

That last sentence sort of summarises the problem. The corp has Resources -- human and other. "Other resources" price cant be controlled, so "human resources" price is controlled because it is the easiest.

Originally Posted by AMG Power

Who decides whether a CEO is paid more than he is worth? Who decides whether a employee is paid more than he is worth? Who decides whether a worker's pay is higher or lower than his worth? Sure, everyone is entitled to an opinion but it is the opinion of the guy who puts his money where his mouth is that really matters.

Makers of the law of the land, thats who, especially for companies that are traded in a public stock market. It is not only the opinion of the guy who invests that matter.

There are scores of regular employees who get increments not because they are competent or worthy of it but because they curry favour with their boss. This would be far more easier to exist and cover up as it is happening at middle management levels. And yes, this may be happening at the CEO levels too.
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Any company that is managed properly will fix a CEO salary with the major portion based on performance and a minor fixed component and a CEO worth his salt will see that as an opportunity for higher earnings.

This whole text would be relevant in a totally different discussion, but not in this one. The case in point here is that the entry level workers's salary is not keeping pace with inflation, and in real terms has gone below, as shown in the graphs in first page.
You are talking about a case where what is easier to increment. The discussion is about how fast it is going to be unsustainable to live with these wages (as has happened say for example in US -- numbers on the first page.)

Here are some cases where workers have been exploiting thousands of crores from companies:

Quoting from Facebook:

Please stay away from propaganda pieces like that from facebook.
Yes FACT has a lot of issues, it is an industry from a bygone era.
Real estate owned by this and other PSUs have been eyed by the barons for quite a long time now, and article pieces like this are side effects.
Especially, there are enough studies about the number of unused housing properties in Kochi and all the major cities in India.
FACT has been slowly (glacier slow) moving to building construction materials and other by product businesses.
Unions in FACT are not more of a problem than unions in say the Govt Secretariat or KSRTC.

Anyway, Unions lobbying for increase in worker wages vs. Board lobbying amongst themselves for higher CXO pay, they are two issues, and I am not sure how one can be a justification for another. You want to know the economics angle of that ? X amount for one person vs X amount for 1000 people. Which do you think helps the economy as a whole ?

The Taj Group of hotels pay the highest wages among all its hotels in India to its workers in Kerala as a result of which a waiter there gets around 50k per month. This is a lot more than what the waiters at their flagship hotel Taj at Mumbai are paid. Or for that matter what a lot of software engineers are paid. This is not because these waiters are far more productive than the ones at Mumbai but just that they are far more unionised.

All that makes me wonder is why in the world wouldnt Taj Mumbai, who arguably charges its patrons highest amount in India doesnt pay its waiters a measly sum of 50k per month.

And before we start getting judgemental on CEO salary, it's probably a good idea to also assess the real reasons behind being "excited" because someone else is being paid a high salary.

You have got it all backwards. Nobody is "excited" because someone is paid a high salary. Everybody is "excited" because many are paid a very low salary.

[nakul0888]

Originally Posted by ashokrajagopal

That last sentence sort of summarises the problem. The corp has Resources -- human and other. "Other resources" price cant be controlled, so "human resources" price is controlled because it is the easiest.

The countries with free est economies and the least government intervention are the richest , most prosperous, and the ones that dont are dirt poor just like ours.

With regards to the CEO pay, I am firmly on the side of Freedom and liberty.
Who owns the company? The shareholders. As long as the Company fulfill their dues and do right by their contracts , nobody should have a say on the companys operations. They get to decide how much their company's employee whether CEO or otherwise gets paid.

If the said employee doesn't like what the shareholders have proposed then dont take the job.

If you dont like the pay offer, walk away.

If the shareholders and the employees can agree to a mutually agreeable salary, whether individually or collectively then do the job and take the pay.

If the Company agrees to pay you certain amount and then dont pay or try to con you, endanger you, harm you then sue them and take them to the cleaners. That should be when the government steps in.

[SmartCat]

Some more data from MINT on CEO pay:





Indian Automobile sector (includes component manufacturers) CEOs have higher pay than almost all the sectors (except cement industry). However, this seems to be a recent phenomenon - because their pay has risen by approximately 160% in the past 5 years. Much more than other sectors.

[V.Narayan]

Trust smartcat to throw the cat amongst the pigeons.:-) properly supported with graphs and charts which is his trademark. Have been reading this thread with interest.

Some of the arguments on this thread may be mixing up the need to pay a fair floor wage to the bottom of the pyramid (no denying that) with another unrelated fact that in some companies (not all) some CEOs manage to wrangle what seems a rather high remuneration for themselves. Some other arguements are mixing up jealousy against others and anger against their own bosses with senior management compensation. Hayek, Jeroen, ashokrajagopal and some others have clearly been there done that and it is reflected in their posts.

The comparison of whether a CEOs wage is fair needs to be made, I believe, against the profit after tax (PAT) he/she generates in a year, the sustainability into future years, market share, stability of operations and where applicable to a lesser extent the improvement in market capitalization ie relative to what he delivers. Similarly the wage a worker or a supervisor or a manager receives has to be a function of the service and productivity he/she delivers subject to minimum wage laws of that country. So if market cap decreases due to stock market changes the CEO will make less or nothing on his stock options while the worker is still likely to get his 7% or 10% wage increment. If the stock climbs the CEO will walk with arms full of gains while the worker will still get his 10% increment. The wage paid to a worker needs to be a function of what he delivers and his productivity and not as ratio to the CEOs compensation.

So Hero Motocorp has a PAT of Rs 5239 crores versus a CEO comp of Rs 75.4 crores to Mr Munjal ie ~1.43%. In Bajaj Auto the comparable figures are Rs 3931 crores and Rs 28 crores ie 0.71% to Rajiv Bajaj. With Eicher Motors' a PAT of Rs 1712 crores led to a CEO comp of Rs 9.5 crores or 0.55%. If we have to look at ratios this is a more useful ratio to look at when determining if a CEO is overpaid or not - compare to a wide section of his peers and as a percentage of PAT. If we wish to drive fair CEO comp it has to be fair to both the shareholder and the CEO. Limiting CEO pay will not lead to higher worker compensation. It will only lead to flight of CEO talent.

As to the workers - contract labour exists in India, as many members point out, only due to our inflexible labour laws and one sided labour courts. Having dealt with organized labour at the coal face I would not consider them weak hapless souls grinding under the yolk of the cruel capitalists. They are the dummy have nots. The real have nots are the contract labour who toil at the bottom of the pyramid to give companies the flexibility of varying force levels (and costs) which the law (for permanent labour) prevents them from doing. And yes they live at the cusp of what is needed to survive in an urban area. For the question some have asked in contract labour the worker gets about 75% of what the big company pays the contractor. The contractor and the big company are still responsible to make sure the worker gets the minimum wage of the land. The noose here is around the neck of the Board of the big company acting as principal.

Allow me to share the perspectives of how a Board views these matters. Like some other BHPians I serve on the Board (and the Compensation Committees) of a few large corporations - listed in either India or the US. When deciding CEO compensation especially in a listed company increase in long term market capitalization and sustained future growth are the points that dominate. The ratio amongst others we look at is CEO comp v/s profit after tax, comp of CEOs in the industry, and how he/she has performed over the last 2 years and what foundation has been laid for meeting targets over the next 5 years. How much weight a Board can exercise is a function of the weight and independence of the Board members. In USA and to a lesser but visible extent in India too some CEOs over negotiate. It all boils down to the dynamics of the individual Board members. On the Boards I serve on we also discuss fair wage to the lowest rung - the operative word is fair and not a ratio of this or that.

The operative chart IMHO is in post #54 of smartcat where growth in PAT has been compared to growth in CEO compensation. It tells us if CEOs are over compensated versus the results they generate. And for the Auto industry the answer is yes though within the industry as we saw, with Eicher, there are exceptions.

[NetfreakBombay]

Originally Posted by smartcat

Some more data from MINT on CEO pay:

Median pay seems way too low. Does it include all compensation (such as ESOP / deferred pay/ sweat equity) ?

[Samurai]

Originally Posted by Jeroen

Your arguments for paying CEO huge amounts of money seems primarily related to how much money they make for the company. Well guess what, that is just part of the job description. Nothing special if he/she does that perse.

Originally Posted by Hayek

A case in point is TCS vs Infy. Compare the performance of the two from the time when Chandra became CEO and you would find that TCS almost doubled in relative value during his term. So Chandra and his team created about USD 40 bn of incremental value for TCS shareholders vs a rival, well regarded management team....True for widely held public companies, but as discussed above, there are paid CEOs (like Chandra and Jobs) is who would have been bargains at 20x what they were paid, and others who clearly don’t deserve their lunch money.

These two quoted parts from Jeroen and Hayek explain the two ends of this debate.

Let's leave Steve Jobs out of this discussion since he started company. There wouldn't be an Apple Inc without him. TCS on the other hand, was already the #1 software company in Asia when Chandra joined it in the late 80s. He is a professional CEO, so let's focus on him. How much credit should be given to professional CEOs?

Suppose an employee X develops a great product all by himself. Company sells 100 pieces of it and makes 1 million in profits. They give 100K to X and he is happy that he was paid his worth.

Then the company hires a new CEO Y for 500K and he sells 1000 pieces of the product and makes 15 million in profits. Keep in mind employee X has no role in sales. Is the worth of employee X still only 100K and CEO still worth 500K?

What happens in most companies is that the employee X might get a small bump to 120K, while the CEO gets pushed to 2 million. The argument used is that the CEO got the revenues from 1M to 15M all by himself, while the employee did nothing towards that effort. However, it completely ignores that the employee enabled the magical jump from 1M to 15M by creating the product in the first place. This is like a relay race, where the finisher gets all the credit for the win. This is one argument.

Any company is a collection of dozens/hundreds/thousands of teams and divisions, that needs to be channeled towards a common goal. They could be R&D, Marketing, Sales, Manufacturing, QA, Finance, Accounting, Personnel, Operations, customer support, etc. CEO make the overall plan and then monitors that plan (and make corrections) as it trickles down the hierarchy and gets executed all around the world. The scope for misunderstanding and miscommunication is great. Same can be said about the feedback the CEO gets back from the field. It is equivalent to fog of war. Somehow, all of them get their act their together and make the plan a success. Should CEO really get all the credit? His job was to make a plan and get everybody to execute it. It is not like he could have executed it without his employees. It was the synergy between all the teams that made it happen. It was team work. Chandra and team didn't added 40B to shareholder value, the whole of TCS did that. This is the other argument.

And I would add to the latter argument. This is not something original, but I got it from former Indian President Abdul Kalam.

Originally Posted by Abdul Kalam

When failure [at ISRO] occurred, the leader of the organization owned that failure. When success came, he gave it to his team. The best management lesson I have learned did not come to me from reading a book; it came from that experience.

I believe this is the real job description of the CEO. Take blame for the failures of the company, and give credit to the employees when the company succeeds.

I am not making some touchy feely statement here. When a company doesn't do well, it is indeed the failure of the CEO. He/She must get the employees come together and deliver his/her plan. He/She must achieve synergy between all the departments of the company towards that plan. That is the job. And it is a very tough job, which is why that role deserves 25-30 times the median salary. And when the job is done well, credit must be given to those thousands of employees who made it possible.

[SmartCat]

Originally Posted by V.Narayan

For the question some have asked in contract labour the worker gets about 75% of what the big company pays the contractor. The contractor and the big company are still responsible to make sure the worker gets the minimum wage of the land.

Does the contractor offer medical insurance, PPF & other benefits to the worker?

When deciding CEO compensation especially in a listed company increase in long term market capitalization and sustained future growth are the points that dominate. The ratio amongst others we look at is CEO comp v/s profit after tax, comp of CEOs in the industry, and how he/she has performed over the last 2 years and what foundation has been laid for meeting targets over the next 5 years.

Good insights. Now I almost feel sorry for the CEOs. Why link his pay with stock market performance? Profits, I understand. Stock movement depends on so many factors. For example, IT stocks did not do very well for 2 or 3 years, but profits were up 8 to 10% per year.

Originally Posted by NetfreakBombay

Median pay seems way too low. Does it include all compensation (such as ESOP / deferred pay/ sweat equity) ?

Mint data, like my data, is from annual reports. CEO compensation includes pretty much everything. Sample -



If the value appears low, remember that many companies in BSE 500 (top 500 companies by size) are promoter owned. Out of that, many companies are profit making and have a generous dividend payout policy. If the CEO's tax free dividend income is significant, he might not care THAT much about his own salary.

[NetfreakBombay]

Originally Posted by smartcat

Mint data, like my data, is from annual reports. CEO compensation includes pretty much everything.

In this specific example, compensation from parent company might be higher than what he gets from Maruti. Total comp of ~4 cr for Maruti's CEO does not seem reasonable.




As you mentioned, other compensations (such as dividends, compensation from other legal entities) might not show up on Quarterly / Annual reports.

[Ragavsr]

Labor reforms in India should focus more on the terms of employment for the worker to prevent exploitation rather than the financial aspect of a job which market forces can do the job.

One of my uncles works a modest job as a office staff in a college. The institution had retained the academic certificates for a year after he had resigned because he had quit a year before the end of a 3 year contract.

I found it exploitative. A penalty of say 1-3 months of say is okay.

I would never take up a job on contract. I had worked in a top software product company as an engineer before quitting and joining medical college to fulfill my childhood ream of becoming a doctor.

What I am hearing from my professors I am close to is that they had to deposit their certificates as well. So, worker exploitation is prevalent in even the higher strata of jobs.

The salaries of cooks, drivers, plumbers, carpenters have all shot up massively , who are now out earning fresher engineers,doctors and lawyers. These are market forces at play.

The salaries for lower level jobs are much higher in Chennai and Bangalore than say Delhi and Mumbai because of demand supply gap. While I don't my flagged for violating team bhp's terms on discussing politics, the low salaries for menial jobs in Delhi should because of a million illegal Bangladeshi immigrants who have procured Adhaar cards and what not.

[vineshpikale]

If I read this right there are two broad points here
A: pay disparity CXO vs Staff and
B: inadequacy or unfairness of pay in absolute terms to shop floor personnel which in itself is a by product of unwillingness of corporations to have personnel on rolls.

My thoughts on B first. India is severely behind in labour reforms. Politically motivated trade unions have caused more damage than good by creating an environment of distrust between capitalists and labour. As a consequence successive Governments have either not had the political courage to bring about changes or have been party to the exploitation. I’m not getting into a over deep dive but unless labour reform happens and a certainty of law comes in and holding to ransom stops capitalists will find via media and the ratio of “contract” to on rolls will never improve. Labour is perishable and has inherently very low bargaining power. Thus protection for exploitation is needed but that doesn’t by default mean creating excessive handicaps on capital. Then again a significant part of the CTC is often useless and inefficient deductions further curtailing real income. But these again are extended dens of the Government for extortion and fraud and change is not likely. To sum it’s a chicken and egg story.

Now turning to A. Part of the problem is B as described above. The other pertinent point is that statistically data in India is not always comparable. In mature economies the Management and ownership is almost fully separate. In India significant business houses are Family managed which skews the data. Second demand and supply. Leadership and strategy quality endowed personnel are scarce and therefore expensive whereas labour supply is relatively abundant and therefore not able to get better value. And very honestly that is not going to improve because it labour does become expensive it will reach the tipping point where it will be substituted with increased automation.

[AMG Power]

Originally Posted by ashokrajagopal

Makers of the law of the land, thats who, especially for companies that are traded in a public stock market. It is not only the opinion of the guy who invests that matter.

If all of this is decided by the maker of law of the land, this entire thread is redundant.

The Companies Act ONLY prescribes a maximum limit which is very high and all the quoted salaries are well within those limits. There are restrictions only when there are inadequate profits.

The maker of the law of the land and this discussion are chalk and cheese.

Originally Posted by ashokrajagopal

You want to know the economics angle of that ? X amount for one person vs X amount for 1000 people. Which do you think helps the economy as a whole ?

Factors such as a level playing field in business and other irrelevant trivia were probably good for doing business in cold war Russia.

Originally Posted by ashokrajagopal

Taj Mumbai, who arguably charges its patrons highest amount in India

Taj Mumbai does not charge its patrons anywhere close to the highest amount in India. They probably did a long long time ago. There are several hotels that charge a lot more.

[Jeroen]

Originally Posted by nakul0888

The countries with free est economies and the least government intervention are the richest , most prosperous, and the ones that dont are dirt poor just like ours.

Well, I don’t think that is strictly true. Although it does depend on how you define rich and prosperous and a free economy. It’s again is the richness and prosperous evenly spread across the country? Or are there still huge difference.

Look at countries such as Sweden, Germany, The Netherlands. By and large these are considered hugely prosperous countries, but are also for instance by Americans considered to be socialistic states. Yes, taxes are high, but there are solid unemployment benefits, state pension, state health insurance, state schooling, free speech, All available to all! It is considered a free economy and by and large a very equal society for men and women alike, irrespective of your background, religion, political and or sexual orientation.

Many people would consider the USA a rich and maybe even a prosperous country. And yes, depends on how you count. But there is still real poverty in the USA at a scale you would find hard to believe. There are few if any social safety nets. Lots and lots of un-equality in every imaginable way, be it race or otherwise.

Jeroen