The cap on the maximum number of directorships brought in by the Securities and Exchange Board of India (Sebi) in 2014 seems to be redefining their pay packets. According to new Sebi rules, a person can hold a maximum of seven independent directorships and only three if he holds an executive position.
As demand for qualified people goes up, fees and perks have been on the rise, especially for independent directors. A recent report on board remuneration commissioned by the National Stock Exchange, shared exclusively with ET Online, shows that the boards' share of profits at the top 500 companies has gone up marginally and the slice for independent directors within this has witnessed a gradual increase over the past three years. The remuneration percentage share of independent directors increased marginally by 18 basis points during the three-year span.
However, family members of promoters and those close to them have preference over others and, therefore, it is not surprising that a major chunk of the total board remuneration is taken away by such directors.
The board remuneration of the sample companies grew from 1.70 per cent of the standalone net profits in FY15 to 1.96 per cent in FY17, according to the report, which was produced by Stakeholders Empowerment Services.
Here are some interesting takeaways from the report: