Govt to put cap on CEO salary, perks

KATHMANDU, NOV 28 - Finance Minister Surendra Pandey said on Saturday that the government would limit perks and benefits to be paid to chief executive officers of the corporate houses including banks and financial institutions."There is a huge gap between the perks and benefits that go to CEOs and the lower level employees. The government wants to reduce the gap," he said while addressing a programme organised by Nepal Rastra Bank (NRB) Employees' Union. "The government will put cap on CEO's salary and benefit by amending the existing Act," he said. When the central bank is itself preparing for putting cap on perks and benefits of CEOs of financial institutions, the minister also echoed the same voice. The NRB has already informed the Nepal Bankers' Association (NBA) about its plans to make guideline aiming to limit their pay. The NBA is a forum of CEOs of the commercial banks.NRB governor Bijaya Nath Bhattarai had said at a programme on 'corporate governance in financial sector' on Nov. 23 that the unjustified sharing of available resources amongst the stakeholders had been the cause of internal conflict. The issue of balance distribution of remuneration and other benefits amongst stakeholders has posed as a challenge to corporate governance in the financial sector, he had told the gathering.According to an NRB study, the perks and salary of a CEO of a national level commercial bank ranges from Rs 500,000 to Rs 1.4 million. The NRB argument has remained that the huge amount of perks and benefits were being given to the head honchos, even if the financial condition of the bank concerned was not very sound. The NRB study also concluded that the practice of awarding huge pay to the CEOs and other subordinates was also putting pressure on the management, especially of new banks, to increase earnings by many folds in order to pay their increased liabilities. This often instigates the management to make massive risky investment in productive sectors like land and real estate that are rejected by established banks, said the official.