High Managerial Remuneration not be easy _ Companies Act 2013

After the passing of the Companies Act 2013 it may be difficult for some Companies to give high salary to Managerial personnel , particularly in a situation in  which the Company is not doing good

For Companies under Financial stress, under CDR may have to think twice before giving high salary to MD etc

Henceforth all listed and some other Comapny will have to constitute the nomination and remuneration committee. This committee has to ensure the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully.

Further the committee should ensure the relationship of remuneration to performance is clear and meeting appropriate performance benchmarks.

Remuneration to directors, key managerial personnel, and senior management should involve a balance between fixed and incentive pay, reflecting short- and long-term performance objectives appropriate to the working of the company and its goals.

Remuneration payable to any one managing director; or whole-time director or manager, shall not exceed five per cent of the net profit of the company. ( No change to the old law )

If there is more than one such director, the remuneration shall not exceed 10 per cent of the net profit to all such directors and manager taken together ( No change to old law )