SEBI’s move to disclose the remuneration of CEOs, CIOs, operating officers, sales head and other officials earning over Rs.60 lakh per annum has drawn flak from AMC officials.
On Friday, SEBI mandated fund houses to disclose compensation of AMC officials with effect from April 1, 2016. In a circular, SEBI has said, “With the underlying objective to promote transparency in remuneration policies so that executive remuneration is aligned with the interest of investors, AMCs shall make such disclosures.”
The CEO of a mid-sized fund house told Cafemutual that disclosure of compensation of executives earning above Rs.60 lakh is part of the new company law. “This is already a part of the new Company Law. The only thing is that now we have to publish it on our websites. However, I think it would serve no purpose. Instead, SEBI could have asked us to disclose costs incurred on various operations like research, customer servicing, credit assessment etc. Investors would like to know how much an AMC spends on such activities. For instance, if an investor comes to know that a fund house pays Rs.2 crore to its COO and spends only Rs.1 crore on research activities, he/she may take a more informed decision.”
Another CEO believes that such a move may induce media to write negative news about the industry. “The media already writes negative things about mutual funds based on assumptions which are factually incorrect. Such disclosures may induce them to right illogical articles with headlines like ‘highest paying fund managers are not performing.”
The sales head of a large fund house said that this move will create instability in the industry. “This move will encourage people movement and create instability in the industry. Every AMC cannot pay as per the industry standards.”
The CEO of a private sector fund house says that this is a regressive move. “SEBI has not discussed about this disclosure in the recent meeting. They could have sought our views on this. We don’t have a problem in disclosing our salaries; however, what about others? Of four financial regulators, only SEBI is moving towards over disclosure. Do banks tell clients how much they are earning from a loan account? Also, SEBI should implement it across the board. Such disclosures should be made mandatory for stock brokers, research firms, credit rating agencies etc.”
