How Salary Structures Of Top Bankers May Change With RBI’s New Rules
Thursday, February 28, 2019 IST
The Reserve Bank of India’s proposal to overhaul the compensation structure for chief executive officers (CEOs) of private sector banks and wholly owned subsidiaries of foreign banks, could mean a decline in effective salaries from current levels.
The rules seek to cap the level of variable pay, including stock options, in relation to the fixed pay, at 200 percent. Earlier while variable pay was capped at 70 percent of fixed pay, ESOPs were not included.
“It is likely that if these proposals become norms, we may see the effective salaries of CEOs could come down. However, it is likely that bank boards would increase the basic salaries to bridge the gap,” said Amit Tandon, founder and managing director, Institutional Investors Advisor Services (IiAS). He added that some additional clarity is awaited on valuing stock options.
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