IRDAI has proposed changes to the salary norms of directors of private insurance companies
New Delhi:
The insurance sector regulator the Insurance Development and Regulatory Authority of India (IRDAI) on Monday proposed amendments to its guidance on remuneration of non-executive directors, chief executive officers, chief executives, and executives. executives and full-time directors of private insurers to examine the excessive risk-taking behavior of top executives.
Under the proposed guidelines, executive, executive and full-time executives’ compensation would be split into fixed pay, demand pay and variable pay.
In addition, the fixed payment must be reasonable, and all levies, including necessary conditions, must be considered part of the fixed payment, according to IRDAI’s draft exposure.
The regulator commented on the draft ‘Guide to the Compensation of Non-Executive Directors and Chief Executive Officers, Chief Executives, Full-Time Directors of Insurance Companies’ on January 19.
It also proposes that non-executive directors be entitled to a remuneration of up to Rs 20 per year, in addition to sitting fees and other expenses.
“In addition to the seat rental fee and other costs, it stipulates the payment of remuneration commensurate with the responsibilities and requirements of the individual director on time, which is considered sufficient to attract qualified individuals with qualifications, in the form of fixed remuneration.
“However, such remuneration shall not exceed Rs 20 lakh per year for each such director excluding the Chairman,” it said.
Regarding the chairman of the board of directors, the proposed guidance states that the remuneration may be decided by the board of directors of the respective company.
Non-executive directors will not be eligible for employee stock ownership plans (ESOPs).
IRDAI’s prior approval is required for any sweat equity allocation to a non-executive director.
Remuneration for full-time directors, executives and executives will be divided into fixed pay, demand pay and variable pay.
“The fixed payment must be reasonable and all fixed payments, including necessary conditions, will be considered part of the fixed payment,” the draft guidance said.
The Guidelines also prescribe norms for calculating wage variation.
