Infosys chairman N R Narayana Murthy said on Tuesday that fairness, transparency and accountability should decide the "compensation" of chief executive officers with a variable component to alter it according to the fortunes of the company.
"CEO compensation is an issue that has to be decided by the board and shareholders. Three factors are to be considered for this -- fairness, transparency and accountability", he said at the CII Leadership Summit in New Delhi.
Fairness was subjective, where the company and the board had to decide what was fair salary and full details must be provided to the shareholders and they should approve, he said.
"As long as you make part of the salary variable so that when the company does well, the CEO also gets a good salary and when the company does not do well, the CEO does not get good salary, there is no problem," Murthy said.
"We have seen particularly in the West when the companies did not do well, when they had to fire thousands of employees at lower levels, the CEOs continued to get very good salary. That hurts people."
Once fairness, transparency and accountability were looked at, it was a decision of the company by the board and approved by the shareholders for the CEOs' compensations.
He said the current time was right to raise India to the ranks of developed nations and for this strong leadership was the need of the hour.
Murthy said benchmarking on a global scale was the only way to compete globally and achieve excellence in all dimensions.
"To do so, Indian companies need to have an export orientation. Recent experience in pharma, manufacturing and IT industries stand testimony to it," he said, adding Infosys had benchmarked with Motorola for quality and Microsoft for their focus on EPS (Earnings Per Share).
With falling trade barriers, consumers had access to the best quality products and services from anywhere in the world; and to compete, Indian industry had to create powerful international brands, he said.
Leaders of the corporate world had to create a vision of growth and value systems, he said.
"We need business leaders who will walk the talk in demonstrating their commitment to a value system," Murthy said.
"This is the time to grow; today Indian software and services exports captured a 15 per cent marketshare worldwide and strong growth are coming from biotech, IT enabled services, telecom, and automobile sectors," he said.
